Labor Digest

1
Case San Beda College of Law

LABOR LAW 2005 CENTRALIZED BAR OPERATIONS
Digests
SUMMARY OF DOCTRINES
PRELIMINARY TITLE
Construction of Labor Laws
“Retirement laws are liberally construed in favor of the persons intended to be benefited,
however, such interpretation cannot be made if there is a clear lack of consensual and statutory
basis of the grant of retirement benefits.” [DIVINA S. LOPEZ vs. NATIONAL STEEL CORPORATION]
Limitations on Management Prerogative

The exercise of management prerogative is not absolute. While it may be conceded that
management is in the best position to know its operational needs, the exercise of management
prerogative cannot be utilized to circumvent the law and public policy on labor and social justice.
That prerogative accorded management could not defeat the very purpose for which our labor laws
exist. By its very nature, encompassing as it could be, management prerogative must be exercised
always with the principles of fair play at heart and justice in mind. [PHILIPPINE AIRLINES vs.
JOSELITO PASCUA, ET AL.]
RA 8042; Migrant Workers and Overseas Filipinos Act of 1995

An employee of a company or corporation engage in illegal recruitment may be held liable
as principal together with his employer, if it is shown that he actively and consciously participated
in illegal recruitment The employee or agent of a corporation engage in unlawful business naturally
aids and abets in the carrying on of such business and will be prosecuted as a principal if, with
knowledge of the business, its purpose and effect, he consciously contributes his efforts to its
conduct and promotion however slight his contribution may be. [EXECUTIVE SECRETARY, ET.AL.
vs CA]
BOOK I
Illegal Recruitment; Elements
Illegal recruitment is committed when two elements concur, namely: (1) the offender has
no valid license or authority required by law to enable one to lawfully engage in recruitment and
placement of workers; and (2) he undertakes either any activity within the meaning of
“recruitment and placement” defined under Art. 13(b), or any of the prohibited practices
enumerated under Art. 34 of the Labor Code. [PEOPLE OF THE PHILIPPINES vs. FLOR GUTIERREZ
Y TIMOD]
Illegal Recruitment in Large Scale; Elements

The essential elements of the crime of illegal recruitment in large scale are: (1) the
accused engages in acts of recruitment and placement of workers defined under Article 13(b) or in
any prohibited activities under Art. 34 of the Labor Code; (2) the accused has not complied with
the guidelines issued by the Secretary of Labor and Employment, particularly with respect to the
securing of a license or an authority to recruit and deploy workers, either locally or overseas; and
(3) the accused commits the unlawful acts against three or more persons, individually or as a
group. [PEOPLE OF THE PHILIPPINES vs. ROSE DUJUA]
Illegal Recruitment in Large Scale; Elements
LABOR LAW COMMITTEE AND DIGEST POOL

 CHAIRPERSON: Francis Benedict P. Rèotutar  ASST. CHAIRPERSON: Juanito R. Lim, Jr.  SUBJECT HEADS: Aimee Roselle S. Sabilala(Labor Standards), Elsa
Villaflor (Labor Relations), Maria Fe M. Taal (Special Laws)  EDP: Flora Sherry Basquiñez  DIGEST POOL HEAD: Jennie Trinidad  DIGEST POOL: Ma.
Jasmine
Isip, Emil Bien Ongkiko, Kareen Faye Pioquinto, Katrina Alfonso, Mary Ellen Cabuhat, Joyce Calunsag, Hashreen Caudang, Raffy Cedro, Christian
Chavez, Chito
Cordero, Louella Pamela David, Sheryl Dolor, Edsel Duque, Marforth Fua, Pure Garcia, Mary Ann Gutierrez, Mildred Mabanglo, Michael Macabata,
Genevieve Nueve, Agnes Piccio, Fred Prieto, Alexander Ragonjan, Sharima Rescar, Aileez Rojas, Robert James Ronquillo, Sylvia Jean Salem, Shiela
Marie Sison, Gloriosa Sze, Jose Mari Tolentino, Paulette Tongcua, Jay Ugalingan
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San Beda College of Law Case
2005 CENTRALIZED BAR OPERATIONS
Digests
LABOR LAW
The elements of illegal recruitment in large scale are: (1) the person undertakes any
recruitment activity defined under Article 13, paragraph (b), or any prohibited practice
enumerated under Article 34 of the Labor Code; (2) said person does not have a license or authority
to engage in the recruitment and placement of workers; and (3) the act is committed against three
or more persons, individually or as a group. The fact that the accused in an illegal recruitment did
not sign nor issue some of the receipts for amounts received from complainants has no bearing on
his culpability so long as complainants show through their respective testimonies and affidavits that
the accused was involved in the prohibited recruitment. [PEOPLE OF THE PHIL. vs. MARLENE
OLERMO]
Solidary Liability of Employer

An employee of a company or corporation engaged in illegal recruitment may be held liable
as principal, together with his employer, if it is shown that he actively and consciously participated
in illegal recruitment. Where it is shown that the employee was merely acting under the direction
of his superiors and was unaware that his acts constituted a crime, he may not be held criminally
liable for an act done for and in behalf of his employer. [PEOPLE OF THE PHILIPPINES V.
ELIZABETH CORPUZ]
BOOK III
Double Holiday Pay
Art. 94 of the Labor Code, as amended, affords a worker the enjoyment of ten paid regular
holidays. The provision is mandatory, regardless of whether an employee is paid on a monthly or
daily basis. Unlike a bonus, which is a management prerogative, holiday pay is a statutory benefit
demandable under the law. Since a worker is entitled to the enjoyment of ten paid regular
holidays, the fact that two holidays fall on the same date should not operate to reduce to nine the
ten holiday pay benefits a worker is entitled to receive. [ASIAN TRANSMISSION CORPORATION vs.
COURT OF APPEALS]
Double Holiday Pay

The minimum allowable divisor is 287, which is the result of 365 days, less 52 Sundays and
less 26 Saturdays (or 52 half Saturdays). Any divisor below 287 days means that the workers are
deprived of their holiday pay for some or all of the ten legal holidays. [CEZAR ODANGO, ET AL. vs.
NLRC, ET AL.]
Leave Credits
Despite their dismissal from the service, government employees are entitled to the leave
credits that they have earned during the period of their employment. As a matter of fairness and
law, they may not be deprived of such remuneration, which they have already earned prior to their
dismissal. [ANSBERTO P. PAREDES vs. FRANCISCO S. PADUA]
Liability of an Indirect Employer

When the agency as contractor failed to pay the guards, the corporation as principal
becomes jointly and severally liable for the guards' wages. Petitioner cannot evade its liability by
claiming that it had religiously paid the compensation of guards as stipulated under the contract
with the security agency. [MARIVELES SHIPYARD CORP. vs. COURT OF APPEALS]
Wage Order and its Exemption

Section 7 of the NWPC Revised Guidelines on Exemption, which is the applicable rule
on this matter, provides that the maximum period of exemption that can be accorded to a qualified
applicant is only for one (1) year from the effectivity of the Wage Order. This non-extendable one
year period of exemption is to afford protection to workers who may be unfairly affected by the
deleterious effect of a prolonged exemption which is not in accord with the very purpose of the
issuance of a Wage Order. [NASIPIT LUMBER COMPANY, PHILIPPINE WALLBOARD CORPORATION
AND ANAKAN LUMBER COMPANY vs. NATIONAL WAGES AND PRODUCTIVITY COMMISSION,
UNITED LUMBER AND GENERAL WORKERS OF THE PHILIPPINES and WESTERN AGUSAN WORKERS
UNION]
2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND SUBJECT
CHAIRPERSONS
Maricel Abarentos (Over-all Chairperson), Ronald Jalmanzar (Over-all Vice Chair), Yolanda Tolentino (VC-Acads), Jennifer Ang (VC-
Secretariat), Joy Inductivo (VC-Finance), Elaine Masukat (VC-EDP), Anna Margarita Eres (VC-Logistics) Jonathan Mangundayao
(Political Law), Francis Benedict Rèotutar (Labor Law),
Romuald Padilla (Civil Law), Charmaine Torres (Taxation Law), Mark David Martinez (Criminal Law), Garny Luisa Alegre (Commercial Law),
Jinky Ann Uy (Remedial Law), Jackie Lou Bautista (Legal Ethics)
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Wage Distortion
A situation where an increase in prescribed wage rates results in the elimination or severe
contraction of intentional quantitative differences in wage or salary rates between and among
employee groups in an establishment as to effectively obliterate the distinctions embodied in such
wage structure based on skills, length of service, or other logical bases of differentiation.
[BANKARD EMPLOYEES UNION-WORKERS ALLIANCE TRADE UNIONS vs. NATIONAL LABOR
RELATIONS COMMISSION]
Elements of Wage Distortion
“(1.) An existing hierarchy of positions with corresponding salary rates; (2) A significant
change in the salary rate of a lower pay class without a concomitant increase in the salary rate of a
higher one; (3) The elimination of the distinction between the two levels; and (4) The existence of
the distortion in the same region of the country.” [BANKARD EMPLOYEES UNION-WORKERS
ALLIANCE TRADE UNIONS vs. NATIONAL LABOR RELATIONS COMMISSION]
BOOK V
Money Claim
Not every controversy or money claim by an employee against the employer or vice-versa is
within the exclusive jurisdiction of the labor arbiter. A money claim by a worker against the
employer or vice-versa is within the exclusive jurisdiction of the labor arbiter only if there is a
"reasonable causal connection" between the claim asserted and employee-employer relation.
Absent such a link, the complaint will be cognizable by the regular courts of justice. [EDUARDO G.
EVIOTA vs. COURT OF APPEALS]
Test to Determine Existence of Employer-Employee Relationship

(1) the manner of selection and engagement; (2) the payment of wages; (3) the presence or
absence of the power of dismissal; and (4) the presence or absence of the power of control. Of
these four, the last one is the most important. [EMPERMACO B. ABANTE, JR. vs. LAMADRID
BEARING & PARTS CORP. and JOSE LAMADRID]
Independent Job Contractor

Someone who (a) carries on an independent business and undertakes the contract work on
his own account under his own responsibility according to his own manner and method, free from
the control and direction of his employer or principal in all matters connected with the
performance of the work except as to the results thereof; and (b) has substantial capital or
investment in the form of tools, equipments, machineries, work premises, and other materials
which are necessary in the conduct of the business. [NEW GOLDEN CITY BUILDERS &
DEVELOPMENT CORPORATION vs. COURT OF APPEALS ]
Creation of Employer-Employee Relationship in Job Contracting

In legitimate job contracting, the law creates an employer-employee relationship for a
limited purpose. The principal employer becomes jointly and severally liable with the job
contractor only for the payment of the employees' wages whenever the contractor fails to pay the
same. [NEW GOLDEN CITY BUILDERS & DEVELOPMENT CORPORATION vs. COURT OF APPEALS]
Independent Contractor
In determining the existence of an independent contractor relationship, several factors
may be considered. In Job-contacting, the contractor is considered merely an agent of the
principal employer and the latter is responsible to the employees of the labor-only contractor as if
such employees had been directly employed by the principal employer. The principal employer
therefore becomes solidarily liable with the labor-only contractor for all the rightful claims of the
employees. Petitioner's liability is that of a direct employer and thus solidarily liable. [SAN
MIGUEL CORPORATION vs. MAERC INTEGRATED SERVICES, INC]
Independent Contractor; Radio and Broadcast Talents

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LABOR LAW
The control test is the most important test our courts apply in distinguishing an employee
from an independent contractor. This test is based on the extent of control the hirer exercises over
a worker. The greater the supervision and control the hirer exercises, the more likely the worker is
deemed an employee. The converse holds true as well — the less control the hirer exercises, the
more likely the worker is considered an independent contractor. A radio broadcast specialist who
works under minimal supervision is an independent contractor. [JOSE Y. SONZA vs. ABS-CBN
BROADCASTING CORP.]
Litigation on the Merits

As much as practicable, litigation should be decided on the merits and not on procedural
technicalities. The statement holds true especially in labor cases in which the defect has been
cured by the motion for reconsideration. [NOVELTY PHILIPPINES vs. CA]
CA Cannot Annul NLRC Decision

The appellate court has no jurisdiction to entertain a petition for annulment of a final and
executory judgment of the NLRC. Section 9 of BP 129 as amended, only vests in the Court of
Appeals “exclusive jurisdiction over actions for annulment of judgments of Regional Trial Courts.”
Moreover, annulment of judgment is allowed only where the ordinary remedies of new trial,
appeal, petition for relief or other appropriate remedies are no longer available through s fault of
petitioners. [ELCEE FARMS, INC., and CORAZON SAGUEMULLER vs. PAMPILO SEMILLANO]
Final and Executory Judgments of the NLRC

Except for correction of clerical errors, final and executory judgments can neither be
amended nor altered, even if the purpose is to correct erroneous conclusions of fact or of law. [C-
E CONSTRUCTION CORPORATION vs. NLRC]
Technicalities Not Strictly Applied in Labor Cases

Article 221 of the Labor Code allows the NLRC and the Labor Arbiter to decide a case on
the basis of position papers and other documents submitted by the parties without resorting to
technical rules of evidence as observed in regular courts of justice. [PAL, INC. vs. TONGSON]
Well settled is the rule that technical rules of procedure shall not be strictly applied in
labor cases. Pursuant to this policy, employers may, on cogent grounds, be allowed to present,
even on appeal, evidence of business losses to justify the retrenchment of workers. [TANJUAN vs.
PHILIPPINE POSTAL SAVINGS BANK, INC.]
Litigation of the Case Should be on the Merits

Cases should be determined on the merits, after full opportunity to all parties for
ventilation of their causes and defenses, rather than on technicality or some procedural
imperfections. Rules of procedure are mere tools designed to expedite the decision or resolution of
cases and other matters pending in court. A strict and rigid application of the rules that would
result in technicalities that tend to frustrate rather than promote substantial justice must be
avoided. [VAN MELLE PHILS vs. VICTOR ENDAYA]
Perfection of Appeal
The perfection of an appeal within the reglementary period for the same is jurisdictional in
character. [CORPORATE INN HOTEL, ET AL. vs. JENNEVIE H. LIZO]
Binding Effect of the Decision of the NLRC

A position is redundant where it is superfluous. It is not enough for a company to merely
declare that it has become overmanned. It must produce adequate proof that such is the actual
situation to justify the dismissal of the affected employees for redundancy. [BONIFACIO ASUFRIN,
JR. vs. SAN MIGUEL CORPORATION]
Computation of Benefits
Respondent who was illegally dismissed from work is actually entitled to reinstatement
without loss of seniority rights and other privileges as well as to his full backwages, inclusive of
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allowances, and to other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual reinstatement. ASPECT OF DUE
PROCESS: “(1) the legality of the act of dismissal, that is, dismissal based on the grounds provided
by Article 282 of the Labor Code, and (2) the legality in the manner of dismissal. The illegality of
the act of dismissal constitutes discharge without just cause, while illegality in the manner of
dismissal is dismissal without due process. [BOLINAO SECURITY AND INVESTIGATION SERVICE,
INC. vs. ARSENIO M. TOSTON]
Consequence of Illegal Dismissal

Firstly, that the employee becomes entitled to reinstatement to his former position without
loss of seniority rights and secondly, the payment of backwages corresponding to the period from
his illegal dismissal up to actual reinstatement. [TOMAS CLAUDIO MEMORIAL COLLEGE, INC. vs.
COURT OF APPEALS ]
Findings of Fact of the CA: When Binding to the Supreme Court

Time and again the much-repeated but not so well-heeded rule that findings of fact of the
Court of Appeals, particularly where it is in absolute agreement with that of the NLRC and the
Labor Arbiter, as in this case, are accorded not only respect but even finality and are deemed
binding upon this Court so long as they are supported by substantial evidence. [GALLERA DE
GUISON HERMANOS, INC., ET AL. vs. MA. ASUNCION C. CRUZ]
Validity of Compromise Agreement

A compromise agreement entered into by the parties not in the presence of the Labor
Arbiter before whom the case is pending shall be approved by him if, after confronting the parties,
particularly the complainants, he is satisfied that they understand the terms and conditions of the
settlement and that it was entered into freely and voluntarily by them and the agreement is not
contrary to law, morals, and public policy. [R & E TRANSPORT, INC. vs. AVELINA P. LATAG,
representing her deceased husband, PEDRO M. LATAG]
Payment of Appeal Bond

Payment of the appeal bond is a jurisdictional requisite for the perfection of an appeal to
the NLRC. It is only in rare instances that the court relaxes the rule upon a showing of substantial
compliance with it and to prevent patent injustice. [FILSYSTEMS INC. vs. NLRC ]
Finality of Decision
Once a decision or resolution becomes final and executory, it is the ministerial duty of the
court or tribunal to order its execution. Such order is not appealable. [KING INTEGRATED
SECURITY SERVICES, INC. vs. GALO S. GATAN]
When Judgment has become Final and Executory

A party who has not appealed from a decision cannot seek any relief other than what is
provided in the judgment appealed from. An appellee who has himself not appealed may not
obtain from the appellate court any affirmative relief other than the ones granted in the decision
of the lower court. [SOLIDBANK CORPORATION vs. COURT OF APPEALS and GERARDO A.
GARCIA]
Exhaustion of Remedies
The remedy of an aggrieved party in a Decision or Resolution of the Secretary of the DOLE
is to timely file a motion for reconsideration as a precondition for any further or subsequent
remedy, and then seasonably file a special civil action for certiorari under Rule 65 of the 1997 Rules
of Civil Procedure. [UNIVERSITY OF IMMACULATE CONCEPCION, ET AL. vs.YOLIBELLE S.
AVINANTE, ET AL.]
Duty to Bargain

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LABOR LAW
The duty to bargain collectively means the performance of a mutual obligation to meet and
convene promptly and expeditiously in good faith for the purpose of negotiating an agreement
within three (3) years from the effectivity of the original CBA. [GENERAL MILLING CORPORATION
vs. COURT OF APPEALS]
Surface Bargaining; Blue-Sky Bargaining

Surface bargaining is defined as “going through the motions of negotiating” without any
legal intent to reach an agreement.Blue-Sky Bargaining is defined as “unrealistic and unreasonable
demands in negotiations by either or both labor and management, where neither concedes anything
and demands the impossible.” It actually is not collective bargaining at all. [STANDARD
CHARTERED BANK EMPLOYEES UNION vs.MA. NIEVES R. CONFESOR, ET AL.]
Collective Bargaining Agreement; Signing Bonus

A bonus is not a demandable and enforceable obligation but it may nevertheless be granted
on equitable considerations as when the giving of such bonus has been the company's long and
regular practice or even if not a practice, the bonus was agreed upon by the parties or unilaterally
offered as an additional incentive. [PHILACOR vs. COURT OF APPEALS, ET AL.]
Interpretation of CBA
Contracts which are not ambiguous are to be interpreted according to their literal
meaning and not beyond their obvious intendment. [MINDANAO STEEL CORPORATION vs.
MINSTEEL FREE WORKERS ORGANIZATION (MINFREWO-NFL) CAGAYAN DE ORO]
Jurisdiction of the Secretary of Labor

Decision or Resolution of the Secretary of the DOLE on appeal shall be final and executory.
Upon finality of the Decision of the Secretary, the entire records of the case shall be remanded to
the office of origin for implementation of the Decision, unless restrained by the appropriate court.
The remedy of an aggrieved party in a Decision or Resolution of the Secretary of the DOLE is to
timely file a motion for reconsideration as a precondition for any further or subsequent remedy.
[SMC QUARRY 2 WORKERS UNION — FEBRUARY SIX MOVEMENT vs. TITAN MEGABAGS
INDUSTRIAL CORP.]
Jurisdiction of the Med-Arbiter and the Secretary of Labor

It is within the exclusive jurisdiction of the Med-Arbiter and the Office of the Secretary in
certification election proceedings to resolve this issue. When this case was filed, the Med-Arbiter
and later on the Office of the Secretary acquired jurisdiction over the subject matter of the case
and the parties to it, to the exclusion of all other adjudicating agencies. There was no longer any
emergency, urgency or a pressing necessity for the CA to still issue a writ of preliminary injunction.
There is no showing in the record that despite the assumption by the SOLE of the dispute between
the petitioner and the respondent, the petitioner is bent on staging a strike against the respondent
in defiance by the petitioner of the order of the SOLE. [TOYOTA MOTOR PHILS. CORPORATION
WORKERS' ASSOCIATION (TMPCWA) vs. COURT OF APPEALS ]
Strike and Lockout

The respondents' claim of good faith is not a valid excuse to dispense with the procedural
steps for a lawful strike. Thus, even if the union acted in good faith in the belief that the company
was committing an unfair labor practice, if no notice of strike and a strike vote were conducted,
the said strike is illegal. Hence, the need for a union to adhere to and comply strictly with the
procedural conditions sine qua non provided for by the law in staging a strike. [GRAND
BOULEVARD HOTEL vs. GENUINE LABOR ORGANIZATION OF WORKERS IN HOTEL, RESTAURANT
AND ALLIED INDUSTRIES]

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Consequences of an Illegal Strike
In Article 264 (a) of the Labor Code it could be gleaned that while a union officer can be
terminated for mere participation in an illegal strike, an ordinary striking employee, like
petitioners herein, must have participated in the commission of illegal acts during the strike. There
must be proof that they committed illegal acts during the strike. Substantial evidence, which may
justify the imposition of the penalty of dismissal, may suffice. [ELIZABETH C. BASCON vs. COURT
OF APPEALS]
Illegal Strike
Continuing a strike in defiance of the return-to-work-order is a prohibited activity under
Article 264 of the Labor Code. Hence, the dismissal of the union’s officers is in order. [SAN JUAN
DE DIOS EDUCATIONAL FOUNDATION EMPLOYEES UNION-ALLIANCE OF FILIPINO WORKERS et.al.
vs. SAN JUAN DE DIOS EDUCATIONAL FOUNDATION, INC. (HOSPITAL) and NATIONAL LABOR
RELATIONS COMMISSION]
Consequence of an Illegal Strike

Article 264 of the Labor Code, in providing for the consequences of an illegal strike, makes
a distinction between union officers and members who participated thereon. Thus, knowingly
participating in an illegal strike is a valid ground for termination from employment of a union
officer. However, mere participation in an illegal strike is not a sufficient ground for termination of
the services of the union members. But the employer must still comply with the two-notice rule in
dismissing the union officer. [STAMFORD MARKETING CORP. vs. JOSEPHINE JULIAN ]
BOOK VI
Probationary Period under Section 2, Rule VII, of the Rules Implementing the Civil Service Law
An employee with original appointment must serve a 6-month probationary period and the
employee may be dropped from the service for unsatisfactory conduct or want of capacity anytime
before the expiration of the probationary period: Provided, that such action is appealable to the
Commission. [GALLARDO U. LUCERO vs. COURT OF APPEALS]
Probationary Employee
Probationary employee is one who, for a given period of time, is under observation and
evaluation to determine whether or not he is qualified for permanent employment. During the
probationary period, the employer is given the opportunity to observe the skill, competence and
attitude of the employee while the latter seeks to prove to the employer that he has the
qualifications to meet the reasonable standards for permanent employment. [FLORENCIO M. DE LA
CRUZ, JR. vs. NLRC ]
Probationary Employment; Computation

Our computation of the 6-month probationary period is reckoned from the date of
appointment up to the same calendar date of the 6th month following. [RADIN C. ALCIRA vs.
NLRC, ET AL.]
Dismissal, Just and Valid Cause

In order to effect a valid dismissal of an employee, the law requires that there be just and
valid cause as provided in Article 282 and that the employee was afforded an opportunity to be
heard and to defend himself. Dismissal may also be based on any of the authorized causes provided
for in Articles 283 and 284 of the Labor Code. [PHIL. EMPLOY SERVICES and RESOURCES, INC. vs.
JOSEPH PARAMIO, ET AL.]
Breach of Trust; When Willful

Article 282(c) of the Labor Code, as amended, provides that an employer can terminate the
employment of the employee concerned for "fraud or willful breach by an employee of the trust
reposed in him by his employer or duly authorized representative." The loss of trust and confidence
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LABOR LAW
must be based on the willful breach of the trust reposed in the employee by his employer. Ordinary
breach will not suffice. A breach of trust is willful if it is done intentionally, knowingly and
purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly,
heedlessly or inadvertently. [DIAMOND MOTORS CORP. vs. COURT OF APPEALS]
Right to Refuse Promotion

An employee cannot be promoted, even if merely as a result of a transfer, without his
consent. There is no law that compels an employee to accept a promotion for the reason that a
promotion is in the nature of a gift or reward, which a person has a right to refuse. Hence, the
exercise by the private respondents of their right cannot be considered in law as insubordination,
or willful disobedience of a lawful order of the employee. [PT & T CORPORATION vs. COURT OF
APPEALS]
Abandonment of Work; Requisites

For abandonment of work to exist, it is essential (1) that the employee must have failed to
report for work or must have been absent without valid or justifiable reason; and (2) that there
must have been a clear intention to severe the employer-employee relationship manifested by
some overt acts. Deliberate and unjustified refusal on the part of the employee to go back to his
work post and resume his employment must be established. Absence must be accompanied by overt
acts unerringly pointing to the fact that the employee simply does not want to work anymore. The
burden of proof to show that there was unjustified refusal to go back to work rests on the
employer. [SAMUEL SAMARCA vs. ARC-MEN INDUSTRIES, INC]
Abandonment of Work
To constitute abandonment, two elements must concur: (1) the failure to report for work
or absence without valid or justifiable reason and (2) a clear intention to sever the employer-
employee relationship. Of the two, the second element is the more determinative factor and
should be manifested by some overt acts. Mere absence is not sufficient. [R TRANSPORT CORP.
vs. ROGELIO EJANDRA]
Hearsay; Affidavits
Where the adverse party is deprived of opportunity to cross-examine the affiants, affidavits
are generally rejected for being hearsay, unless the affiant themselves are placed on the witness
stand to testify thereon. [NUGUIT vs. NLRC]
Summary Hearing of Labor Cases

Formal hearing of the case on its merits is not mandatory in labor cases but is dependent on
the discretion of the labor arbiter who has the sole power to determine whether or not there is a
need for a hearing. [SHOPPES MANILA, INC vs. NLRC]
Two-Notice Requirement
(a) A written notice containing a statement of the cause for the termination to afford the
employee ample opportunity to be heard and defend himself with the assistance of his
representative, if he so desires; (b) If the employer decides to terminate the services of the
employee, the employer must notify him in writing of the decision to dismiss him, stating clearly
the reason therefor. [SHOPPES MANILA, INC vs. NLRC]
Illegal Dismissal; Abandonment of Work

For abandonment of work to exist, it is essential (1) that the employee must have failed to
report for work or must have been absent without valid or justifiable reason; and (2) that there
must have been a clear intention to sever the employer-employee relationship manifested by some
overt acts. [ACD INVESTIGATION SECURITY AGENCY, INC. vs. PABLO D. DAQUERA]
Illegal Dismissal; Two Notice Rule

Singer has shown compliance with the two-notice requirement — first, of the intention to
dismiss, indicating therein the acts or omissions complained against; and second, of the decision to

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dismiss an employee — and in between such notices, an opportunity for him to answer and rebut
the charges against him. [GUTIERREZ vs. SINGER SEWING MACHINE]
Constructive Dismissal
Constructive dismissal exists where there is a cessation of work because continued
employment is rendered impossible, unreasonable or unlikely. It is also present when an
employee's functions and such reduction is not grounded on valid grounds such as genuine business
necessity. [FERNANDO GO vs. COURT OF APPEALS and MOLDEX PRODUCTS, INC.]
Closure of Establishment
It is only in instances of “retrenchment to prevent losses and in cases of closures or
cessation of operations of establishment or undertaking not due to serious business losses or
financial reverses” that employees whose employment has been terminated as a result are entitled
to separation pay. [JOSEFINA A. CAMA vs. JONI’S FOOD SERVICES, INC. ]
Closure of Establishment for a Lawful Cause; When Made

The owner, for any bona fide reason, can lawfully close shop at anytime. Just as no law
forces anyone to go into business, no law can compel anybody to continue in it. It would indeed be
stretching the intent and spirit of the law if SC were to unjustly interfere with the management's
prerogative to close or cease its business operations, just because said business operation or
undertaking is not suffering from any loss or simply to provide the workers continued employment.
And since private respondents' cessation and closure of business was lawful, there was no illegal
dismissal to speak of. This fact negated the obligation to pay backwages. Instead private
respondents were required to give separation pay, which they already did, to all their regular
employees. [MAC ADAMS METAL ENGINEERING WORKERS UNION-INDEPENDENT vs. MAC ADAMS
METAL ENGINEERING ]
Retrenchment; Valid Causes

Retrenchment is a management prerogative consistently recognized and affirmed by this
Court. It is, however, subject to faithful compliance with the substantive and the procedural
requirements laid down by law and jurisprudence. It must be exercised essentially as a measure of
last resort, after less drastic means have been tried and found wanting. [EMCO PLYWOOD
CORPORATION vs. PERFERIO ABELGAS et. al.]
Judicial Review of Labor Cases

The findings of facts and conclusion of the NLRC are generally accorded not only great
weight and respect but even clothed with finality and deemed binding on this Court as long as they
are supported by substantial evidence. [CBL TRANSIT, INC. vs. NLRC]
Cessation
Simply asserting a state of insolvency is not enough to show serious financial losses. [CBL
TRANSIT, INC. vs. NLRC]
Backwages
An employee who is unjustly dismissed is entitled to reinstatement, without loss of
seniority rights and other privileges, and to the payment of his full backwages, inclusive of
allowances, and other benefits or their monetary equivalent, computed from the time his
compensation was withheld from him (which, as a rule, is from the time of his illegal dismissal) up
to the time of his actual reinstatement. [PHIL. JOURNALISTS, INC. vs. MICHAEL MOSQUEDA]
Backwages; Period Covered for Payment

The Court's decision in G.R. No. 114290, which directed the payment of the petitioners'
backwages from the time they were dismissed up to the time they are actually reinstated, has
become the "law of the case" which now binds the NLRC and the private respondent. The "law of
the case" doctrine has been defined as "a term applied to an established rule that when an
appellate court passes on a question and remands the case to the lower court for further
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proceedings, the question there settled becomes the law of the case upon subsequent appeal.
[FULGENCIO vs. NLRC]
Full Backwages; Definition

The clear legislative intent of the law amending the Labor Code (Rep. Act. No. 6715) is to
give more benefits to workers than was previously given them under the Mercury Drug rule or the
'deduction of earnings elsewhere' rule. Thus, a closer adherence to the legislative policy behind
Rep. Act. No. 6715 points to 'full backwages' as meaning exactly that, i.e., without deducting from
backwages the earnings derived elsewhere by the concerned employee during the period of his
illegal dismissal. In other words, the provision calling for 'full backwages' to illegally dismissed
employees is clear, plain and free from ambiguity and, therefore, must be applied without
attempted or strained interpretation. Index animi sermo est. [JACINTO RETUYA vs. DUMARPA]
Retirement Benefits and Separation Pay

The right of the concerned employees to receive both retirement benefits and separation
pay depends upon the provisions in the Retirement Plan. [JOSE B. CRUZ et.al. vs. PHILIPPINE
GLOBAL COMMUNICATIONS, INC. AND/OR ALFREDO PARUNGAO]
Illegal Dismissal; Backwages

In the present case, petitioners were dismissed because of a "change of management." They
were not given any prior written notice, but simply told that their services were terminated on the
day they stopped working for Insular Builders, Inc. Under the circumstances, the CA was correct in
upholding the labor arbiter's finding that they had been illegally dismissed. Having been illegally
dismissed, petitioners should be awarded back wages. The fact that they worked for a sister
company immediately after being dismissed from Insular Builders, Inc. should not preclude such
award. [JACINTO RETUYA vs. DUMARPA]
SPECIAL LAWS
PD 626; Death Benefits
It serves to mitigate the effects of compulsory land acquisition by balancing the rights of
the landowner and the tenant and by implementing the doctrine that social justice was not meant
to perpetrate an injustice against the landowner. A retained area, as its name denotes, is land
which is not supposed to leave the landowner's dominion, thus sparing the government from the
inconvenience of taking land only to return it to the landowner afterwards, which would be a
pointless process. [GSIS vs. TEODOSIO CUANANG]
Permanent Total Disability

The test of whether or not an employee suffers from permanent total disability is the
capacity of the employee to continue performing his work notwithstanding the disability he
incurred. Permanent total disability does not mean a state of absolute helplessness, but means
disablement of an employee to earn wages in the same kind of work, or work of similar nature, that
he was trained for, or any work which a person of similar mentality and attainment could do.
[GOVERNMENT SERVICE INSURANCE SYSTEM vs. LEO L. CADIZ]
Requisites of Agrarian Tenancy Relationship; PARAB’S Jurisdiction

(1) the subject matter should be agricultural land; (2) the purpose should be agricultural
production; and (3) there should be personal cultivation done by the tenants themselves. [SPS.
NUMERIANO and CARMELITA ROMERO vs. MERCEDES L. TAN]
Comprehensive Agrarian Reform Program

It serves to mitigate the effects of compulsory land acquisition by balancing the rights of
the landowner and the tenant and by implementing the doctrine that social justice was not meant
to perpetrate an injustice against the landowner. A retained area, as its name denotes, is land
which is not supposed to leave the landowner's dominion, thus sparing the government from the
inconvenience of taking land only to return it to the landowner afterwards, which would be a
pointless process. [SAMAHAN NG MAGSASAKA SA SAN JOSEP vs. MARIETTA VALISNO, ET AL.]
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P.D. 626
The present law has not ceased to be an employees' compensation law or a social
legislation; hence, the liberality of the law in favor of the working man and woman still prevails,
and the official agency charged by law to implement the constitutional guarantee of social justice
should adopt a liberal attitude in favor of the employee in deciding claims for compensability,
especially in light of the compassionate policy towards labor which the 1987 Constitution vivifies
and enhances. [AZUCENA O. SALALIMA vs. EMPLOYEES COMPENSATION COMMISSION, ET AL.]
CASE DIGESTS
PRELIMINARY TITLE
CONSTRUCTION OF LABOR LAWS
DIVINA S. LOPEZ vs. NATIONAL STEEL CORPORATION

[G.R. No. 149674. February 16, 2004]
SANDOVAL-GUTIERREZ:
FACTS: The National Steel Corporation, herein respondent, embarked on two (2) massive projects,
the Five-Year Expansion Program (Phase II-B) and the Integrated Steel Mill Project. Consequently,
respondent employed and trained several employees for the operation of the projects. One of them
was Divina S. Lopez, herein petitioner. She was appointed researcher, she was promoted as a senior
researcher at respondent’s Market Research Department.
With this development, respondent adopted an organizational streamlining program.

Respondent issued a memorandum announcing the retrenchment of several workers at its Iligan and
Pasig Plants and Makati Head Office. Respondent terminated petitioner’s services and having
rendered twelve (12) years of service, was paid by respondent representing her separation benefits
at the rate of “two months basic salary per year of service.” Additionally, she received her leave
credits, 13th month pay, and uniform and rice subsidy differential. And after having been paid her
separation benefits, she executed and signed a Release and Quitclaim. Barely three (3) years
thereafter, petitioner filed with the Labor Arbiter a complaint for payment of retirement benefits
against respondent, docketed and was consolidated with case entitled “Benito Anievas et al. vs.
National Steel Corporation.” The complainants here are also retrenched employees of respondent.
The Labor Arbiter rendered a Decision dismissing the complaints. On appeal, the National
Labor Relations Commission (NLRC), affirmed the Labor Arbiter’s Decision. Petitioner filed a
motion for reconsideration but was denied. Hence, she filed with the Court of Appeals a petition
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for certiorari alleging that the NLRC committed grave abuse of discretion in declaring that she is
not entitled to retirement benefits and in holding that she is precluded from claiming such benefits
because of her quitclaim. The Court of Appeals promulgated its Decision affirming the assailed
Resolutions of the NLRC. The Court of Appeals issued a Resolution denying the petitioner’s motion
for reconsideration.
ISSUE: Whether or not petitioner is entitled to retirement benefits.
HELD: While it is axiomatic that retirement laws are liberally construed in favor of the persons
intended to be benefited, however, such interpretation cannot be made in this case in light of the
clear lack of consensual and statutory basis of the grant of retirement benefits to petitioner.
It bears stressing that as held by the Labor Arbiter, the NLRC and the Court of Appeals,
there is no provision in the parties’ CBA authorizing the payment to petitioner retirement benefits
in addition to her retrenchment pay; and that there is no indication that she was forced or “duped”
by respondent to sign the Release and Quitclaim. The Court of Appeals also ruled that petitioner,
not having reached the retirement age, is not entitled to retirement benefits under Article 287 of
the Labor Code.
This Court has always accorded respect and finality to the findings of fact of the Court of
Appeals, particularly if they coincide with those of the Labor Arbiter and the NLRC when supported
by substantial evidence, as in this case. The reason for this is that quasi-judicial agencies, like the
Arbitration Board and the NLRC, have acquired a unique expertise because their jurisdictions are
confined to specific matters.
LIMITATIONS ON MANAGEMENT PREROGATIVE
PHILIPPINE AIRLINES vs. JOSELITO PASCUA, ET AL.

[G.R. No. 143258. August 15, 2003.]
FACTS: PAL hired private respondents as station attendants on a four or six-hour work-shift a day
at five to six days a week. On certain occasions, PAL compelled private respondents to work
overtime because of urgent necessity. The contracts with private respondents were extended
twice, the last of which appears to have been for an indefinite period.
Private respondent Joselito Pascua, in his and on behalf of other 79 part-time station
attendants, filed with the Department of Labor and Employment a complaint for regularization and
other benefits. During the pendency of the case, PAL President Garcia and PAL Chairman &
Corporate Executive Officer Dominguez converted the employment status of private respondents
from temporary part-time to regular part-time. Private respondents dropped their money claim
then pending before the Office of Executive Labor Arbiter Guanio, thus leaving for consideration
their complaint for "regularization" — conversion of their employment status from part-time to
regular (working on an 8-hour shift). Finding private respondents' remaining cause of action was
rendered "moot and academic" by their supervening regularization, the Executive Labor Arbiter
dismissed the former’s complaint. On appeal, the NLRC, finding for private respondents, declared
them as regular employees of PAL with an eight-hour work-shift.
Petitioner filed a motion for reconsideration of the NLRC decision, which was denied.
Petitioner filed with the Court of Appeals a special civil action for certiorari to annul the NLRC
decision but was dismissed and petitioner's motion for reconsideration was denied. Hence, this
appeal.
ISSUE: Whether or not the appellate court erred when it upheld the decision of the NLRC to accord
respondents regular full-time employment although petitioner, in the exercise of its management
prerogative, requires only part-time services.

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HELD: It must be borne in mind that the exercise of management prerogative is not absolute.
While it may be conceded that management is in the best position to know its operational needs,
the exercise of management prerogative cannot be utilized to circumvent the law and public policy
on labor and social justice. That prerogative accorded management could not defeat the very
purpose for which our labor laws exist: to balance the conflicting interests of labor and
management, not to tilt the scale in favor of one over the other, but to guaranty that labor and
management stand on equal footing when bargaining in good faith with each other. By its very
nature, encompassing as it could be, management prerogative must be exercised always with the
principles of fair play at heart and justice in mind.
Article 280 of the Labor Code 13 provides that any employee who has rendered at least one
year of service, whether such service is continuous or broken, shall be considered a regular
employee with respect to the activity in which he is employed, and his employment shall continue
while such activity actually exists. It is basic to the point of being elementary that nomenclatures
assigned to a contract shall be disregarded if it is apparent that the attendant circumstances do not
support their use or designation. The same is true with greater force concerning contracts of
employment, imbued as they are with public interest. Although respondents were initially hired as
part-time employees for one year, thereafter the over-all circumstances with respect to duties
assigned to them, number of hours they were permitted to work including over-time, and the
extension of employment beyond two years can only lead to one conclusion: that they should be
declared full-time employees. Thus, not without sufficient and substantial reasons, the claim of
management prerogative by petitioner ought to be struck down for being contrary to law and
policy, fair play and good faith.
RA 8042
EXECUTIVE SECRETARY, et. al. vs. COURT OF APPEALS

(May 25, 2004)
CALLEJO, SR., J.:

FACTS: ACRO-Phil filed a petition for declaratory relief with the RTC to declare as
unconstitutional Sec.2, par.(g), Sec. 6, pars.(a)-(j),(l),&(m), Sec. 7, pars.(a)&(b),Secs. (9)&(10) of
RA 8042 (The Migrant Workers and Overseas Filipinos Act of 1995), with a plea for the issuance of a
temporary restraining order and/or writ of preliminary injunction enjoining the respondents therein
from enforcing the assailed provisions of the law.
The respondents contends that, (1) the law discriminated against unskilled workers and
their families as the law encourage the deployment skilled Filipino workers, (2) the grant of
incentives to service contractors and manning agencies to the exclusion of all other licensed and
authorized recruiters is an invalid qualification, (3) the penalty imposed by law, being
disproportionate to the prohibited acts, discourage the business of licensed and registered
recruitment agency, (4) the law violates the prohibition against ex-post facto law and bill of
attainder because it presumes that a licensed and registered recruitment agency is guilty of illegal
recruitment involving economic sabotage, upon a finding that it committed any of the prohibited
acts under the law, (5) the 90-day period which the labor arbiter should decide a money claim is
relatively short, and could deprived a licensed and registered recruiters of their right to due
process, (6) the law impair the power of the Supreme Court to promulgate rules of procedure, (7)
the law abridge freedom to contract, (8) the singling out of entertainers and performing artist
under the assailed department orders (implementing rules and regulations of RA 8042) constitutes
class legislation and violates the equal protection clause.
The respondent justified its plea for injunctive relief on the allegation in its amended
petition that its members are exposed to the immediate and irreparable danger of being deprived
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of their right to a livelihood and other constitutional rights without due process, on its claim that a
great number of duly licensed recruitment agencies have stopped and suspended for fear that (a)
their officers and employees would be prosecuted under the unjust and unconstitutional penal
provisions af RA 8042 and meted equally unjust and excessive penalties, including life
imprisonment, for illegal recruitment without regard to whether the recruitment agencies involved
are licensed and/or authorized and (b) if the members of the respondent, which are licensed and
authorized, decide to continue with their business, they face the stigma and the coursed of being
labeled “illegal recruiters”.
Petitioners contend that the petitioners has no locus standi, it failed to adduce in evidence
a certified copy of its Articles of Incorporation and the resolution of said members authorizing it to
represent the said agencies in the proceedings. The petitioners assert that the law is presumed
constitutional and, as such, the respondent was burdened to make a case strong enough to
overcome such presumption and establish a clear right to injunctive relief.
ISSUE: Whether or not the CA erred in affirming the trial courts order and the writ of preliminary
injunction issued by it enjoining the petitioners from implementing the the provisions of RA 8042.
HELD: The assailed order and writ of preliminary injunction is mooted by case law. In People vs.
Chowdury, it was held that illegal recruitment is a crime of economic sabotage and must be
enforced. The court in this case upheld the validity of Sec. 6 of RA 8042 which provides that
employees of recruitment agencies may be criminally liable for illegal recruitment. An employee of
a company or corporation engage in illegal recruitment may be held liable as principal together
with his employer, if it is shown that he actively and consciously participated in illegal recruitment
The employee or agent of a corporation engage in unlawful business naturally aids and abets in the
carrying on of such business and will be prosecuted as a principal if, with knowledge of the
business, its purpose and effect, he consciously contributes his efforts to its conduct and promotion
however slight his contribution may be.
In People vs. Diaz, the SC held that RA 8042 is but an amendment of the Labor Code of the
Philippines and is not an ex-post facto law because it is not applied retroactively. In JMM
Promotion and Management, Inc. vs. CA, the issue of the extent of the police power of the state to
regulate a business, profession or calling vis-a-vis the equal protection clause and the non-
impairment clause were raised and it was held that, a profession, trade or calling is a property
right within the meaning of our constitutional guarantees. One cannot be deprived of the right to
work and the right to make a living because this are property rights, the arbitrary and unwarranted
deprivation of which normally constitutes an actionable wrong. Nevertheless, no right is absolute,
and the proper regulation of a profession, calling, business or trade has always been upheld as
legitimate subject of a valid exercise of the police power by the state particularly when their
conduct affects either the execution of legitimate governmental functions, the preservation of the
state, the public health and welfare and public morals.
In Philippine Association of Service Exporters, Inc. vs. Drillon, the court held that the non-
impairment clause of the Constitution must yield to the loftier purposes targeted by the
government. Equally important, into every contract is read provisions of existing law and always a
reservation of the police power for so long as the agreement deals with a subject impressed with
public welfare.
The equal protection clause is directed principally against undue favor and individual or
class privilege. It is not to prohibit legislation which is limited to the object to the object to which
it is directed and by the territory in which it is to operate. It does not require absolute equality,
but merely all persons be treated alike under like conditions both as to privileges conferred and
liabilities imposed.
By its rulings, the court thereby affirmed the validity of the assailed penal and procedural
provisions of RA 8042, including the imposable penalties therefore. Until the court, by final
judgment, declares that the said provisions are unconstitutional, the enforcement of said provisions
cannot be enjoined.
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BOOK 1
ILLEGAL RECRUITMENT IN LARGE SCALE; ELEMENTS
PEOPLE OF THE PHILIPPINES vs. FLOR GUTIERREZ Y TIMOD

[G.R. No. 124439. February 5, 2004]
TlNGA, J.:
FACTS: With the promises of jobs abroad unfulfilled, complainants decided to verify if the accused
was a licensed recruiter. Upon learning from the POEA that she was not so licensed, they
proceeded to the Philippine Anti-Crime Commission (PACC) to execute their respective affidavits.
The investigator confirmed with the POEA that the accused was not licensed or authorized to
recruit overseas contract workers. The accused was arrested on an entrapment operation.
In her defense, the accused claimed that as an “employee” of a duly licensed agency who
was tasked to recruit and offer job placements abroad, she could not be held liable for illegal
recruitment. She admitted that she had no authority to recruit in her personal capacity, but that
her authority emanated from a Special Power of Attorney (SPA) and a Certification issued by a
licensed agency. At the time complainants applied for overseas employment, the accused was
“employed” as a Marketing Directress of Sarifudin Manpower and General Services, a duly licensed
agency with License No. OS-91-LB-61193-NL issued by the Department of Labor and Employment.
[58] A Special Power of Attorney (SPA) from Sarifudin, dated May 1, 1994, states that she was
authorized. Accused Flor Gutierrez filed the present appeal seeking the reversal of her conviction.
ISSUE: Whether or not, the conviction of the accused should be upheld even though she is licensed
recruiter.
HELD: Illegal recruitment is committed when two elements concur, namely: (1) the offender has no
valid license or authority required by law to enable one to lawfully engage in recruitment and
placement of workers; and (2) he undertakes either any activity within the meaning of
“recruitment and placement” defined under Art. 13(b), or any of the prohibited practices
enumerated under Art. 34 of the Labor Code. Art. 13(b) of the Labor Code defines “recruitment
and placement” as “any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or
procuring workers, and includes referrals, contract services, promising or advertising for
employment, locally or abroad, whether for profit or not: Provided, That any person or entity
which, in any manner, offers or promises for a fee employment to two or more persons, shall be
deemed engaged in recruitment and placement.
The crime becomes Illegal Recruitment in Large Scale when the two elements concur, with
the addition of a third element: the recruiter committed the same against three or more persons,
individually or as a group. As found by the trial court, the evidence on record, notably appellant’s
own version, indicates that she was running her own labor recruitment business.
Appellant cannot escape liability by claiming that she was not aware that before working
for her employer in the recruitment agency, she should first be registered with the POEA. Illegal
recruitment in large scale is malum prohibitum, not malum in se. Good faith is not a defense. As
appellant committed illegal recruitment against three or more persons, she is liable for Illegal
Recruitment in Large Scale.
PEOPLE OF THE PHILIPPINES vs. ROSE DUJUA

[G.R. Nos. 149014-16. February 5, 2004]
TINGA, J.:
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FACTS: Complainant Beldon Caluten, went to the accused’s office, the World Pack Travel and
Tours. Upon Beldon’s inquiry, Ramon Dujua said that he sends applicants abroad and gave Beldon
an application form. Beldon filled up the form and submitted it to Ramon, who told him that he
must pay a processing fee and make an advance payment. Beldon was promised work as a factory
worker in Japan. He advanced money for his processing fees and other expenses. Despite such
payments, the promise to send Beldon to work in Japan remained unfulfilled, Beldon asked Ramon
to give him back his money. Beldon never recovered his payments, however, prompting him and his
fellow applicants to file a complaint at the National Bureau of Investigation (NBI). Private
complainants Jaime Cabus, Roberto Perlas and Romulo Partos suffered the same fate as Beldon. He
also filed a compliaint against the accused.
The prosecution presented a Certification issued by Hermogenes C. Mateo, Director II,

Licensing Branch of the POEA, stating that Ramon Dujua is not licensed or authorized by the POEA
to recruit workers abroad. Another Certification, of even date shows that neither is the World Pack
Travel and Tours authorized to recruit workers abroad. The accused Ramon Dujua denied that he
was a recruiter. He claimed that he was a mere janitor, messenger and errand boy of the World
Pack Travel and Tours. The company is owned by his aunt, Editha Singh, and managed by his
mother Rose Dujua. He admitted he did not have a license to recruit,but acknowledged receiving
the money given by complainants but denied knowing what it was for. He said, however, that his
mother only asked him to count the money.
RTC convicted Dujua of illegal recruitment in large scale, committed against Jaime Cabus,
Beldon Caluten and Roberto Perlas, and of two counts of estafa, committed against Cabus and
Perlas.
ISSUE: Whether or not, the prosecution proved the guilt of the accused in illegal recruitment in
large scale by means of proof beyond reasonable doubt.
HELD: Yes. The essential elements of the crime of illegal recruitment in large scale are: (1) the
accused engages in acts of recruitment and placement of workers defined under Article 13(b) or in
any prohibited activities under Art. 34 of the Labor Code; (2) the accused has not complied with
the guidelines issued by the Secretary of Labor and Employment, particularly with respect to the
securing of a license or an authority to recruit and deploy workers, either locally or overseas; and
(3) the accused commits the unlawful acts against three or more persons, individually or as a
group. All three elements have been established beyond reasonable doubt.
First, the testimonies of the complaining witnesses satisfactorily prove that appellant
promised them employment and assured them placement overseas. Complainants were firm and
categorical. All of them positively identified appellant as the person who recruited them for
employment abroad. Their testimonies dovetail each other on material points. There is no
adequate showing that any of them was impelled by any ill motive to testify against appellant.
Second, appellant did not have any license or authority to recruit persons for overseas
work, as shown by the Certification issued by the POEA. Neither did his employer, the World Pack
Travel and Tours, possess such license or authority.
PEOPLE OF THE PHIL. vs. MARLENE OLERMO

[G.R. No. 127848. July 17, 2003.]
AZCUNA, J.:
FACTS: In separate informations filed before the RTC of Valenzuela, Marlene Olermo a.k.a. Marlene
Tolentino was accused of illegal recruitment in large scale as defined and penalized under Article
38 in relation to Article 39 (a) of the Labor Code, as amended by P.D. 2018, and five counts of
estafa.
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Appellant Olermo denied all the charges against her. She alleged that she was engaged only
in visa assistance. She denied ever having represented herself as possessing authority to deploy
workers for overseas employment. She thus explained that she only offered complainants
Villanueva, Aquino-Villanueva, Aparicio and Majarucon assistance in processing their tourist visas.
With respect to the accusation of complainant Berador, appellant alleged that she was only helping
him process his trainee's visa. However, the trial court rendered a decision convicting appellant of
the crimes charged. Hence, this appeal.
It is the contention of the appellant that the prosecution failed to prove beyond reasonable
doubt all the essential elements of the crime of illegal recruitment in large scale. Furthermore, she
contends that her alleged act of illegally recruiting at least three persons was not sufficiently
established by the testimonies of the witnesses for the prosecution.
ISSUES:
a) Whether or not appellant was engaged in recruitment and placement.
b) Whether or not appellant Olermo is guilty of the crime of illegal recruitment in large
scale.
HELD: a) YES. Appellant's acts of promising, offering and assuring employment overseas to
complainants fall squarely within the ambit of recruitment and placement as defined in Article 13,
paragraph (b) of the Labor Code, as amended. The fact that she did not sign nor issue some of the
receipts for amounts received from complainants has no bearing on her culpability. The
complainants have shown through their respective testimonies and evidence that she was indeed
involved in the prohibited recruitment. In fact, it was even proven that appellant advertised her
services in a newspaper.
b) YES. Article 38 of the Labor Code renders illegal those recruitment activities without the
necessary license or authority from the POEA. The elements of illegal recruitment in large scale
are: (1) the person undertakes any recruitment activity defined under Article 13, paragraph (b), or
any prohibited practice enumerated under Article 34 of the Labor Code; (2) said person does not
have a license or authority to engage in the recruitment and placement of workers; and (3) the act
is committed against three or more persons, individually or as a group.
All these three elements were proven by the prosecution beyond reasonable doubt. First,
the complaining witnesses have satisfactorily established that appellant promised them
employment and assured them of placement overseas. Appellant even had her services advertised
in a newspaper, undoubtedly to reach more people seeking jobs abroad. Second, appellant did not
have any license to recruit persons for overseas work. The Licensing Division of the POEA issued a
certification to this effect. Third, appellant undertook the recruitment of not less than three
workers. The complainants herein were recruited individually on different occasions. The law
applies whether the workers were recruited individually or as a group.
SOLIDARY LIABILITY OF EMPLOYERS
PEOPLE OF THE PHILIPPINES vs. ELIZABETH CORPUZ

G.R. No. 148198. October 1, 2003
YNARES-SANTIAGO, J.:
FACTS: Private complainants Belinda Cabantog, Concepcion San Diego, Erlinda Pascual and Restian
Surio went to Alga-Moher International Placement Services Corporation to apply for employment in
Taiwan. They were introduced by an “Aling Josie” to the agency's President and General Manager
Mrs. Evelyn Gloria H. Reyes. Mrs. Reyes asked them to accomplish the application forms.
Thereafter, they were told to return to the office with P10,000.00 each as processing fee. Private
complainants returned to the agency to pay the processing fees. Mrs. Reyes was not at the agency
that time, but she called her secretary of three months, herein appellant Elizabeth Corpuz, on the
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telephone and told the latter to receive private complainants' processing fees. In compliance with
the order of her employer and since the cashier was absent, appellant received the processing fees
of private complainants. Thereafter, appellant advised the private complainants to wait for the
contracts to arrive from the Taiwan employers.
Two months later, nothing happened to their applications. Thus, private complainants
decided to ask for the refund of their money from appellant who told them that the processing fees
they had paid were already remitted to Mrs. Reyes. When they talked to Mrs. Reyes, she told them
that the money she received from appellant was in payment of the latter's debt. Thus, private
complainants filed their complaint for illegal recruitment in large scale against appellant.
For her part, appellant resolutely denied having a hand in the illegal recruitment and
claimed that she merely received complainants' processing fees in compliance with the order of her
employer. Moreover, she had no knowledge that the agency's license was suspended by the POEA on
July 29, 1998, the day before the fact. The trial court found appellant guilty.
ISSUE: Whether or not the appellant guilty of the crime charged.
HELD: No. An employee of a company or corporation engaged in illegal recruitment may be held
liable as principal, together with his employer, if it is shown that he actively and consciously
participated in illegal recruitment. Settled is the rule that the existence of the corporate entity
does not shield from prosecution the corporate agent who knowingly and intentionally causes the
corporation to commit a crime. The culpability of the employee therefore hinges on his knowledge
of the offense and his active participation in its commission. Where it is shown that the employee
was merely acting under the direction of his superiors and was unaware that his acts constituted a
crime, he may not be held criminally liable for an act done for and in behalf of his employer.
The prosecution failed to adduce sufficient evidence to prove appellant's active

participation in the illegal recruitment activities of the agency. As already established, appellant
received the processing fees of the private complainants for and in behalf of Mrs. Reyes who
ordered her to receive the same. She neither gave an impression that she had the ability to deploy
them abroad nor convinced them to part with their money. More importantly, she had no
knowledge that the license was suspended the day before she received the money. Their failure to
depart for Taiwan was due to the suspension of the license, an event which appellant did not have
control of. Her failure to refund their money immediately upon their demand was because the
money had been remitted to Mrs. Reyes on the same day she received it from them.
While we strongly condemn the pervasive proliferation of illegal job recruiters and
syndicates preying on innocent people anxious to obtain employment abroad, nevertheless, we find
the pieces of evidence insufficient to prove the guilt of appellant beyond reasonable doubt.
BOOK III
DOUBLE HOLIDAY PAY
ASIAN TRANSMISSION CORPORATION vs. COURT OF APPEALS

[G. R. No. 144664. March 15, 2004]
CARPIO-MORALES, J.:
FACTS: The Department of Labor and Employment (DOLE), issued an Explanatory Bulletin wherein
it clarified, inter alia, that employees are entitled to 200% of their basic wage on April 9, 1993,
whether unworked, which apart from being Good Friday [and, therefore, a legal holiday], is also
Araw ng Kagitingan [which is also a legal holiday].
Despite the explanatory bulletin, petitioner [Asian Transmission Corporation] opted to pay
its daily paid employees only 100% of their basic pay on April 9, 1998. Respondent Bisig ng Asian
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Transmission Labor Union (BATLU) protested. In accordance with Step 6 of the grievance procedure
of the Collective Bargaining Agreement (CBA) existing between petitioner and BATLU, the
controversy was submitted for voluntary arbitration. The Office of the Voluntary Arbitrator
rendered a decision directing petitioner to pay its covered employees “200% and not just 100% of
their regular daily wages for the unworked April 9, 1998 which covers two regular holidays, namely,
Araw ng Kagitingan and Maundy Thursday.”
The Court of Appeals upheld the findings of the Voluntary Arbitrator.further adding that the
Collective Bargaining Agreement (CBA) between petitioner and BATLU, the law governing the
relations between them, clearly recognizes their intent to consider Araw ng Kagitingan and Maundy
Thursday, on whatever date they may fall in any calendar year, as paid legal holidays during the
effectivity of the CBA and that “there is no condition, qualification or exception for any variance
from the clear intent that all holidays shall be compensated.”
ISSUE: Whether or not, Relief under Rule 65 is the proper remedy of the petitioner; 2. Whether or
not, the Secretary of Labor committed grave abuse of discretion in issuing an explanatory bulletin
interpreting Art. 94 of the Labor Code.
HELD:
The petition is devoid of merit. Since the Court of Appeals had jurisdiction over the
petition under Rule 65, any alleged errors committed by it in the exercise of its jurisdiction would
be errors of judgment which are reviewable by timely appeal and not by a special civil action of
certiorari. The appeal from a final disposition of the Court of Appeals is a petition for review under
Rule 45 and not a special civil action under Rule 65 of the Rules of Court, now Rule 45 and Rule 65,
respectively, of the 1997 Rules of Civil Procedure. For the writ of certiorari under Rule 65 of the
Rules of Court to issue, a petitioner must show that he has no plain, speedy and adequate remedy
in the ordinary course of law against its perceived grievance. A remedy is considered “plain, speedy
and adequate” if it will promptly relieve the petitioner from the injurious effects of the judgment
and the acts of the lower court or agency. In this case, appeal was not only available but also a
speedy and adequate remedy.
Technicality aside, this Court finds no ground to disturb the assailed decision. Holiday pay
is a legislated benefit enacted as part of the Constitutional imperative that the State shall afford
protection to labor. Art. 94 of the Labor Code, as amended, affords a worker the enjoyment of ten
paid regular holidays. The provision is mandatory, regardless of whether an employee is paid on a
monthly or daily basis. Unlike a bonus, which is a management prerogative, holiday pay is a
statutory benefit demandable under the law. Since a worker is entitled to the enjoyment of ten
paid regular holidays, the fact that two holidays fall on the same date should not operate to reduce
to nine the ten holiday pay benefits a worker is entitled to receive.
In any event, Art. 4 of the Labor Code provides that all doubts in the implementation and
interpretation of its provisions, including its implementing rules and regulations, shall be resolved
in favor of labor. Moreover, Sec. 11, Rule IV, Book III of the Omnibus Rules to Implement the Labor
Code provides that “Nothing in the law or the rules shall justify an employer in withdrawing or
reducing any benefits, supplements or payments for unworked regular holidays as provided in
existing individual or collective agreement or employer practice or policy.” The provision of the
CBA entered into by the parties, petitioner had obligated itself to pay for the legal holidays as
required by law.
DOUBLE HOLIDAY PAY
CEZAR ODANGO, ET AL. vs. NLRC, ET AL.

[G.R. No. 147420. June 10, 2004.]
CARPIO, J.:
Jasmine
Chavez, Chito
20
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LABOR LAW
FACTS: Petitioners are monthly-paid employees of ANTECO. DOLE found ANTECO liable for
underpayment of the monthly salaries of its employees. The DOLE directed ANTECO to pay its
employees wage differentials which ANTECO failed to pay. Thus, thirty-three (33) monthly-paid
employees filed complaints with the NLRC Sub-Regional Branch VI, Iloilo City, praying for payment
of wage differentials, damages and attorney's fees. Labor Arbiter rendered a Decision in favor of
petitioners granting them wage differentials. ANTECO appealed reversed the Labor Arbiter's
Decision. Petitioners' motion for reconsideration was denied. Petitioners then elevated the case to
this Court through a petition for certiorari, which the Court dismissed for petitioners' failure to
comply with Section 11, Rule 13 of the Rules of Court. On Motion for reconsideration, the Court set
aside the dismissal and referred the case to CA following the doctrine in St. Martin Funeral Home v.
NLRC. CA then dismissed the complaint. The MR was also denied. Hence, this petition.
ISSUE: Whether or not, the petitioners are entitled to their money claim.
HELD: No. Even assuming that Section 2, Rule IV of Book III is valid, petitioners' claim will still fail.
The basic rule in this jurisdiction is "no work, no pay." The right to be paid for un-worked days is
generally limited to the ten legal holidays in a year. Petitioners' claim is based on a mistaken notion
that Section 2, Rule IV of Book III gave rise to a right to be paid for un-worked days beyond the ten
legal holidays. In effect, petitioners demand that ANTECO should pay them on Sundays, the un-
worked half of Saturdays and other days that they do not work at all. Petitioners' line of reasoning
is not only a violation of the "no work, no pay" principle, it also gives rise to an invidious
classification, a violation of the equal protection clause. Sustaining petitioners' argument will make
monthly-paid employees a privileged class who are paid even if they do not work.
The use of a divisor less than 365 days cannot make ANTECO automatically liable for
underpayment. The facts show that petitioners are required to work only from Monday to Friday
and half of Saturday. Thus, the minimum allowable divisor is 287, which is the result of 365 days,
less 52 Sundays and less 26 Saturdays (or 52 half Saturdays). Any divisor below 287 days means that
ANTECO's workers are deprived of their holiday pay for some or all of the ten legal holidays. The
304 days divisor used by ANTECO is clearly above the minimum of 287 days.
LEAVE CREDITS
ANSBERTO P. PAREDES vs. FRANCISCO S. PADUA

A.M. No. CA-91-3-P April 14, 2004
PANGANIBAN, J.:
FACTS: Judge Ansberto Paredes filed a complaint against his cousin, Respondent Padua, for having
falsified the former's signature on a document captioned "Authority to Sell" and for having obtained
money with the use of that document. The Court dismissed respondent from the service and
forfeited his retirement benefits.
The Court referred the Petition to the OCA for evaluation, report and recommendation. The
Court Administrator observed that twelve and one-half (12 ½) years had passed since the filing of
the Complaint, and ten (10) years since the finality of respondent’s dismissal from the service. The
Court, however, has modified and even reduced the penalties already imposed on some offenders,
owing to some intervening factors or circumstances that merited the mitigation of their sentences.
ISSUE: Whether or not respondent is entitled to leave benefits after dismissal from service.
HELD: As regards the leave benefits, we concur with the court administrator. The dismissal of
respondent has exposed him to the attendant humiliation and tremendous suffering and virtually
stripped him of his dignity and livelihood. Further, his destitution is aggravated by the bad state of
his health, considering that he is already in the twilight of his life. In the interest of justice and in
consideration of the present plight of respondent, the application of the aforementioned cases and
of the amended Civil Service Rules is in order. He should be granted the leave credits that he
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earned during the period of his government service. We allow him to claim such credits in order to
provide him and his family a lifeline and possibly to keep him from again succumbing to the dark
temptations sometimes caused by financial woes.
LIABILITY OF AN INDIRECT EMPLOYER
MARIVELES SHIPYARD CORP. vs. COURT OF APPEALS

G.R. No. 144134 November 11, 2003
QUISUMBING, J.:
FACTS: In October 1993, petitioner corporation engaged the services of Longest Force Investigation
and Security Agency, Inc. to render security services at its premises. Longest Force deployed its
security guards at petitioner’s shipyard at Mariveles, Bataan. According to petitioner, it religiously
complied with the terms of the security contract with Longest Force (LF). However, it found the
services unsatisfactory and inadequate, causing it to terminate its contract with LF. LF, in turn,
terminated the security guards (private respondents). These private respondents filed a complaint
for illegal dismissal, underpayment of wages, nonpayment of overtime pay, premium pay for
holiday and rest day, service incentive leave pay, 13 th month pay, and attorney’s fees against LF
and petitioner before the Labor Arbiter. LF filed a crossclaim against petitioner. Petitioner denied
liability on account of illegal dismissal, stressing that no employer-employee relationship existed
between it and the private respondents. They also wanted the cross-claim be dismissed. The
Labor arbiter declared LF and petitioner jointly and severally liable to pay the money claims of
complainants. Ordered also LF to reinstate to former or equivalent positions the respondents
without loss of seniority rights and privileges with full backwages. NLRC affirmed in toto. CA
denied petitioner’s special civil action for certiorari.
ISSUE: Whether or not the CA erred in affirming that LF and petitioner corporation is jointly and
severally liable for payment when there is clear showing that petitioner honored its contract with
LF.
HELD: No. Petitioner’s liability is joint and several with LF pursuant to Articles 106, 107 and 109 of
the Labor Code.
In this case, when petitioner contracted for security services with Longest Force as the
security agency that hired private respondents to work as guards for the shipyard corporation,
petitioner became an indirect employer of private respondents pursuant to Article 107
abovecited. Following Article 106, when the agency as contractor failed to pay the guards, the
corporation as principal becomes jointly and severally liable for the guards' wages. Petitioner
cannot evade its liability by claiming that it had religiously paid the compensation of guards as
stipulated under the contract with the security agency. Labor standards are enacted by the
legislature to alleviate the plight of workers whose wages barely meet the spiraling costs of their
basic needs. Labor laws are considered written in every contract. Stipulations in violation thereof
are considered null. Similarly, legislated wage increases are deemed amendments to the contract.
Thus, employers cannot hide behind their contracts in order to evade their (or their contractors'
or subcontractors') liability for noncompliance with the statutory minimum wage.
CASE DOCTRINE: When the agency as contractor failed to pay the guards, the corporation as
principal becomes jointly and severally liable for the guards' wages. Petitioner cannot evade its
liability by claiming that it had religiously paid the compensation of guards as stipulated under the
contract with the security agency.
WAGE ORDER AND ITS EXEMPTION
NASIPIT LUMBER COMPANY vs. NATIONAL WAGES AND PRODUCTIVITY COMMISSION

G.R. No. 128296 September 8, 2003
Jasmine
Chavez, Chito
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LABOR LAW
SANDOVAL-GUTIERREZ, J.:
FACTS: The Regional Tripartite Wages and Productivity Board (RTWPB) of Region X, Northern
Mindanao, Cagayan de Oro City, issued Wage Order No. RX-03. This Wage Order mandated a P7.00
increase in the minimum daily wage of all workers and employees in the private sector in Region X
receiving a daily wage of not more than P130.00 per day and an additional P10.00 allowance per
day. Subsequently, petitioners filed their separate application for exemption from compliance with
Wage Order No. RX-03, claiming they are distressed establishments whose paid-up capital has been
impaired by at least twenty-five percent (25%). The RTWPB granted petitioners a full exemption
from compliance with the said Wage Order for a period of one (1) year or from December 8, 1993 to
December 7, 1994. On December 8, 1994, petitioners, citing the continuous business decline in the
wood processing industry, filed for extension of their full exemption for another year. Petitioners
contend they are entitled to an extension for another year of their full exemption as distressed
establishments on the basis of paragraph 4, Section 3 of Wage Order No. RX-03. Petitioners claim
that the NWPC exceeded its jurisdiction (1) in deleting the phrase "renewable for another year
provided the conditions still persist and warrant the exemption" from paragraph 4, Section 3 of
Wage Order No. RX-03. RTWPB denied the application. On appeal, it was affirmed by NWPC.
ISSUE: Whether or not the period of exemption under Wage Order RX-03 can be extended for more
than one (1) year.
HELD: We rule in the negative. Section 7 of the NWPC Revised Guidelines on Exemption, which is
the applicable rule on this matter, provides that the maximum period of exemption that can be
accorded to a qualified applicant is only for one (1) year from the effectivity of the Wage Order.
This non-extendable one year period of exemption is to afford protection to workers who may be
unfairly affected by the deleterious effect of a prolonged exemption which is not in accord with the
very purpose of the issuance of a Wage Order.
Moreover, the NWPC has the power not only to prescribe guidelines to govern wage orders,
but also to issue exemptions therefrom. In short, the NWPC lays down the guidelines which the
RTWPB implements. In affirming the RTWPB's Resolution denying petitioners' application for
extension for another year of their full exemption from compliance with Wage Order No. RX-03, the
NWPC did not act with grave abuse of discretion.
WAGE DISTORTION; ELEMENTS
BANKARD EMPLOYEES UNION-WORKERS ALLIANCE TRADE UNIONS vs. NLRC

[G.R. No. 140689. February 17, 2004]
CARPIO-MORALES, J.:
FACTS: Bankard, Inc. (Bankard) classifies its employees by levels, to wit: Level I, Level II, Level III,
Level IV, and Level V. On May 28, 1993, its Board of Directors approved a “New Salary Scale”, made
retroactive to April 1, 1993, for the purpose of making its hiring rate competitive in the industry’s
labor market. The “New Salary Scale” increased the hiring rates of new employees, to wit: Levels I
and V by one thousand pesos (P1,000.00), and Levels II, III and IV by nine hundred pesos (P900.00).
Accordingly, the salaries of employees who fell below the new minimum rates were also adjusted
to reach such rates under their levels.
Bankard’s move drew the Bankard Employees Union-WATU (petitioner), the duly certified
exclusive bargaining agent of the regular rank and file employees of Bankard, to press for the
increase in the salary of its old, regular employees. Bankard took the position, however, that there
was no obligation on the part of the management to grant to all its employees the same increase in
an across-the-board manner.
As the continued request of petitioner for increase in the wages and salaries of Bankard’s
regular employees remained unheeded, it filed a Notice of Strike on August 26, 1993 on the ground
of discrimination and other acts of Unfair Labor Practice (ULP).
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A director of the National Conciliation and Mediation Board treated the Notice of Strike as a
“Preventive Mediation Case” based on a finding that the issues therein were “not strikeable”.
Petitioner filed another Notice of Strike on October 8, 1993 on the grounds of refusal to bargain,
discrimination, and other acts of ULP - union busting. The strike was averted, however, when the
dispute was certified by the Secretary of Labor and Employment for compulsory arbitration. The
NLRC, finding no wage distortion, dismissed the case for lack of merit. Petitioner’s motion for
reconsideration of the dismissal of the case was denied.
Petitioner thereupon filed a petition for certiorari before this Court. In accordance with its
ruling in St. Martin Funeral Homes v. NLRC, the petition was referred to the Court of Appeals
which, by October 28, 1999, denied the same for lack of merit.
ISSUE: Whether or not the unilateral adoption by an employer of an upgraded salary scale that
increased the hiring rates of new employees without increasing the salary rates of old employees
resulted in wage distortion within the contemplation of Article 124 of the Labor Code.
HELD: Upon the enactment of R.A. No. 6727 (WAGE RATIONALIZATION ACT, amending, among
others, Article 124 of the Labor Code) on June 9, 1989, the term “wage distortion” was explicitly
defined as: “A situation where an increase in prescribed wage rates results in the elimination or
severe contraction of intentional quantitative differences in wage or salary rates between and
among employee groups in an establishment as to effectively obliterate the distinctions embodied
in such wage structure based on skills, length of service, or other logical bases of differentiation.”
Prubankers Association v. Prudential Bank and Trust Company laid down the four elements
of wage distortion, to wit: (1.) An existing hierarchy of positions with corresponding salary rates;
(2) A significant change in the salary rate of a lower pay class without a concomitant increase in
the salary rate of a higher one; (3) The elimination of the distinction between the two levels; and
(4) The existence of the distortion in the same region of the country.
In a problem dealing with “wage distortion,” the basic assumption is that there exists a
grouping or classification of employees that establishes distinctions among them on some relevant
or legitimate bases. The differing wage rate for each of the existing classes of employees reflects
this classification. To determine the existence of wage distortion, the “historical” classification of
the employees prior to the wage increase must be established. Thus the employees of private
respondent have been “historically” classified into levels, i.e. I to V, and not on the basis of their
length of service. Put differently, the entry of new employees to the company ipso facto place[s]
them under any of the levels mentioned in the new salary scale which private respondent adopted
retroactive [to] April 1, 1993. It is thus clear that there is no hierarchy of positions between the
newly hired and regular employees of Bankard, hence, the first element of wage distortion
provided in Prubankers is wanting.
As did the Court of Appeals, this Court finds that the third element provided in Prubankers
is also wanting. Even assuming that there is a decrease in the wage gap between the pay of the old
employees and the newly hired employees, to our mind said gap is not significant as to obliterate
or result in severe contraction of the intentional quantitative differences in the salary rates
between the employee group. As already stated, the classification under the wage structure is
based on the rank of an employee, not on seniority. For this reason, ,wage distortion does not
appear to exist. Apart from the findings of fact of the NLRC and the Court of Appeals that some of
the elements of wage distortion are absent, petitioner cannot legally obligate Bankard to correct
the alleged “wage distortion” as the increase in the wages and salaries of the newly-hired was not
due to a prescribed law or wage order.
Wage distortion is a factual and economic condition that may be brought about by different
causes. The mere factual existence of wage distortion does not, however, ipso facto result to an
obligation to rectify it, absent a law or other source of obligation which requires its rectification.
Jasmine
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LABOR LAW
Bankard’s right to increase its hiring rate, to establish minimum salaries for specific jobs, and to
adjust the rates of employees affected thereby is embodied under Section 2, Article V (Salary and
Cost of Living Allowance) of the parties’ Collective Bargaining Agreement. This CBA provision,
which is based on legitimate business-judgment prerogatives of the employer, is a valid and legally
enforceable source of rights between the parties.
BOOK V
JURISDICTION OF THE LABOR ARBITER; MONEY CLAIM
EDUARDO G. EVIOTA vs. COURT OF APPEALS

[G.R. No. 152121. July 29, 2003.]
CALLEJO, SR., J.:

FACTS: The respondent Standard Chartered Bank and petitioner Eduardo G. Eviota executed a
contract of employment under which the petitioner was employed by the respondent bank as
Compensation and Benefits Manager, VP (M21). However, the petitioner abruptly resigned from the
respondent bank barely a month after his employment and rejoined his former employer. His
resignation, which did not comply with the 30-day prior notice rule under the law and under the
Employment Contract, was so unexpected that it disrupted plans already in the pipeline. As a
result, the Bank incurred expenses in carrying out its part of the contract. Eviota never complied
with the Bank's demand that he reimburse the latter for the expenses incurred on his account.
Hence, the respondent bank filed a complaint against the petitioner with the RTC of Makati City for
actual, moral and exemplary damages.
The petitioner filed a motion to dismiss the complaint on the ground that the action for
damages of the respondent bank was within the exclusive jurisdiction of the Labor Arbiter under
paragraph 4, Article 217 of the Labor Code of the Philippines, as amended.
ISSUE: Whether or not the labor arbiter has jurisdiction to award the damages.
HELD: None. Not every controversy or money claim by an employee against the employer or vice-
versa is within the exclusive jurisdiction of the labor arbiter. A money claim by a worker against
the employer or vice-versa is within the exclusive jurisdiction of the labor arbiter only if there is a
"reasonable causal connection" between the claim asserted and employee-employer relation.
Absent such a link, the complaint will be cognizable by the regular courts of justice. In the case at
bar, Petitioner does not ask for any relief under the Labor Code of the Philippines. It seeks to
recover damages agreed upon in the contract as redress for private respondent's breach of his
contractual obligation to its "damage and prejudice." Such cause of action is within the realm of
Civil Law, and jurisdiction over the controversy belongs to the regular courts. The fact that the
private respondent was the erstwhile employer of the petitioner under an existing employment
contract before the latter abandoned his employment is merely incidental.
TEST TO DETERMINE THE EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP
ABANTE, JR. vs. LAMADRID BEARING & PARTS CORP. and JOSE LAMADRID
[G.R. No. 159890. May 28, 2004.]
YNARES-SANTIAGO, J.::
FACTS: Petitioner was employed by respondent company Lamadrid Bearing and Parts Corporation
as a salesman earning a commission of 3% of the total paid-up sales covering the whole area of
Mindanao. Aside from selling the merchandise of respondent corporation, he was also tasked to
collect payments from his various customers. Sometime in 1998, petitioner encountered five
customers/clients with bad accounts. Petitioner was confronted by respondent Lamadrid over the
bad accounts. Not contented with the issuance of checks as security for the bad accounts,

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respondents “tricked” petitioner into signing two documents, which he later discovered to be a
Promissory Note and a Deed of Real Estate Mortgage.
Respondent deposited the remaining checks which were dishonored by the drawee bank
due to “Account Closed.” Counsel for respondent corporation sent a letter to petitioner demanding
that he make good the dishonored checks or pay their cash equivalent. In response, petitioner sent
a letter addressed to the counsel for respondent corporation, which directed the corporation to
off-set the amount to his commission. Petitioner sent another letter to respondent Lamadrid that
he intends to seek legal advice regarding the matter.
While doing his usual rounds as commission salesman, petitioner was handed by his
customers a letter from the respondent company warning them not to deal with petitioner since it
no longer recognized him as a commission salesman. In the interim, petitioner received a subpoena
from the Office of the City Prosecutor of Manila for violations of Batas Pambansa Blg. 22 filed by
respondent Lamadrid. Petitioner thus filed a complaint for illegal dismissal with money claims
against respondent company and its president, Jose Lamadrid, before the NLRC. The Labor Arbiter
declared respondents to pay jointly and severally complainant EMPERMACO B. ABANTE his awarded
separation pay, back wages (partial) unpaid commissions, refund of deductions, damages and
attorney’s fees. On appeal, the National Labor Relations Commission reversed the decision of the
Labor Arbiter. Petitioner challenged the decision of the NLRC before the Court of Appeals which
denied the petition.
ISSUE: Whether or not petitioner, as a commission salesman, is an employee of respondent

corporation.
HELD: NO. To ascertain the existence of an employer-employee relationship, jurisprudence has

invariably applied the four-fold test, namely: (1) the manner of selection and engagement; (2) the
payment of wages; (3) the presence or absence of the power of dismissal; and (4) the presence or
absence of the power of control. Of these four, the last one is the most important. The so-called
“control test” is commonly regarded as the most crucial and determinative indicator of the
presence or absence of an employer-employee relationship. Under the control test, an employer-
employee relationship exists where the person for whom the services are performed reserves the
right to control not only the end achieved, but also the manner and means to be used in reaching
that end.
Applying the aforementioned test, an employer-employee relationship is notably absent in

this case. It is undisputed that petitioner Abante was a commission salesman who received 3%
commission of his gross sales. Yet no quota was imposed on him by the respondent; such that a
dismal performance or even a dead result will not result in any sanction or provide a ground for
dismissal. He was not required to report to the office at any time or submit any periodic written
report on his sales performance and activities. Although he had the whole of Mindanao as his base
of operation, he was not designated by respondent to conduct his sales activities at any particular
or specific place. He pursued his selling activities without interference or supervision from
respondent company and relied on his own resources to perform his functions. Respondent company
did not prescribe the manner of selling the merchandise; he was left alone to adopt any style or
strategy to entice his customers. While it is true that he occasionally reported to the Manila office
to attend conferences on marketing strategies, it was intended not to control the manner and
means to be used in reaching the desired end, but to serve as a guide and to upgrade his skills for a
more efficient marketing performance. Moreover, petitioner was free to offer his services to other
companies engaged in similar or related marketing activities as evidenced by the certifications
issued by various customers.
Petitioner decried the alleged intimidation and trickery employed by respondents to obtain
from him a Promissory Note and to issue forty-seven checks as security for the bad accounts
incurred by five customers. While petitioner may have been coerced into executing force to issue

Jasmine
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LABOR LAW
the said documents, it may equally be true that petitioner did so in recognition of a valid financial
obligation.
INDEPENDENT JOB CONTRACTOR; CREATION OF EMPLOYER-EMPLOYEE RELATIONSHIP
NEW GOLDEN CITY BUILDERS & DEVELOPMENT CORPORATION

vs. COURT OF APPEALS
[G.R. No. 154715. December 11, 2003.]
FACTS: Petitioner New Golden City Builders and Development Corporation, a corporation engaged
in the construction business, entered into a construction contract with Prince David Development
Corporation for the construction of a 17-storey office and residential condominium building along
Katipunan Road, Loyola Heights, Quezon City, Metro Manila.
Petitioner engaged the services of Nilo Layno Builders to do the specialized "concrete
works, form works and steel rebars works", in consideration of the total contract price of P5
Million. Pursuant to the contract, Nilo Layno Builders hired private respondents to perform work at
the project. After the completion of the phase for which Nilo Layno Builders was contracted,
sometime in 1996, private respondents filed a complaint case against petitioner and its president,
Manuel Sy, with the Arbitration Branch of the NLRC for "unfair labor practice, non-payment of 13th
month pay, non-payment of 5 days service incentive leave, illegal dismissal and severance pay in
lieu of reinstatement."
Labor Arbiter Felipe Garduque rendered a decision finding that Nilo Layno Builders was a
labor-only-contractor; thus, private respondents were deemed employees of the petitioner. Both
parties appealed the decision of the Labor Arbiter to the NLRC. The NLRC affirmed with
modification the Labor Arbiter's decision. As modified, the NLRC held that private respondents were
illegally dismissed and ordered petitioner to reinstate them and to pay their full backwages.
Since petitioner's motion for a reconsideration of the decision was denied, it instituted a
special civil action for certiorari with the Court of Appeals, alleging that the NLRC gravely abused
its discretion in totally discarding uncontroverted evidence and in relying merely on conjectures
and assumptions not supported by facts. The Court of Appeals denied the petition.
ISSUES:
1. Whether Nilo Layno Builders was an "independent contractor" or a "labor-only"
contractor;
2. Whether there existed an employer-employee relationship between petitioner and
private respondents.
HELD: The Court finds partial merit in the petition.
(1) Under Section 8, Rule VIII, Book III, of the Omnibus Rules Implementing the Labor Code,
an independent contractor is one who undertakes "job contracting," i.e., a person who: (a) carries
on an independent business and undertakes the contract work on his own account under his own
responsibility according to his own manner and method, free from the control and direction of his
employer or principal in all matters connected with the performance of the work except as to the
results thereof; and (b) has substantial capital or investment in the form of tools, equipments,
machineries, work premises, and other materials which are necessary in the conduct of the
business. The test to determine the existence of independent contractorship is whether one
claiming to be an independent contractor has contracted to do the work according to his own
methods and without being subject to the control of the employer, except only to the results of the
work.

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This is exactly the situation obtaining in the case at bar. Nilo Layno Builders hired its own
employees, the private respondents, to do specialized work in the Prince David Project of the
petitioner. The means and methods adopted by the private respondents were directed by Nilo
Layno Builders except that, from time to time, the engineers of the petitioner visited the site to
check whether the work was in accord with the plans and specifications of the principal. As
admitted by Nilo G. Layno, he undertook the contract work on his own account and responsibility,
free from interference from any other persons, except as to the results; that he was the one paying
the salaries of private respondents; and that as employer of the private respondents, he had the
power to terminate or dismiss them for just and valid cause. Indubitably, the Court finds that Nilo
Layno Builders maintained effective supervision and control over the private complainants.
(2) We hold that there existed an employer-employee relationship between petitioner and
private respondents albeit for a limited purpose. In legitimate job contracting, the law creates an
employer-employee relationship for a limited purpose, i.e., to ensure that the employees are paid
their wages. The principal employer becomes jointly and severally liable with the job contractor
only for the payment of the employees' wages whenever the contractor fails to pay the same. Other
than that, the principal employer is not responsible for any claim made by the employees.
From the foregoing disquisition, the petitioner did not, as it could not, illegally dismissed
the private complainants. Hence, it could not be held liable for backwages and separation pay.
Nevertheless, it is jointly and severally liable with Nilo Layno Builders for the private complainants'
wages, in the same manner and extent that it is liable to its direct employees. The joint and
several liability of the employer or principal was enacted to ensure compliance with the provisions
of the Code, principally those on statutory minimum wage. The contractor or subcontractor is made
liable by virtue of his or her status as a direct employer, and the principal as the indirect employer
of the contractor's employees.
INDEPENDENT CONTACTOR
SAN MIGUEL CORPORATION, vs. MAERC INTEGRATED SERVICES, INC.

[G.R. No. 144672. July 10, 2003.]
BELLOSILLO, J.:
FACTS: Respondents were workers hired by San Miguel Corporation (SMC) through its agent or
intermediary Maerc Integrated Services, Inc. (MAERC) an alleged an independent contractor whose
primary corporate purpose was to engage in the business of cleaning, receiving, sorting, classifying,
etc., glass and metal containers. They washed and segregated various kinds of empty bottles used
by SMC to sell and distribute its beer beverages to the consuming public. They were paid on a per
piece or pakiao basis except for a few who worked as checkers and were paid on daily wage basis.
It appears that SMC entered into a Contract of Services with MAERC engaging its services on a non-
exclusive basis for a year and was renewed for two (2) more years. It also provided for its
automatic renewal on a month-to-month basis after the two (2)-year period and required that a
written notice to the other party be given thirty (30) days prior to the intended date of
termination, should a party decide to discontinue with the contract.
Subsequently, SMC informed MAERC of the termination of their service contract, citing its
plans to phase out its segregation activities due to the installation of labor and cost-saving devices.
When the service contract was terminated, SMC stopped them from performing their jobs. The
workers filed their complaints against San Miguel Corporation (petitioner herein) and Maerc
Integrated Services, Inc. (respondent herein), for illegal dismissal, underpayment of wages, non-
payment of service incentive leave pays and other labor standards benefits, and for separation
pays.
The Labor Arbiter rendered a decision holding that MAERC was an independent contractor
and dismissed the complaints for illegal dismissal but ordered MAERC to pay complainants'
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separation benefits. MAERC and SMC were also ordered to jointly and severally pay complainants
their wage differentials and to pay attorney's fees. The National Labor Relations Commission
(NLRC) ruled that MAERC was a labor-only contractor and that complainants were employees of
SMC.
Petitioner filed a petition for certiorari with prayer for the issuance of a temporary
restraining order and/or injunction with this Court which then referred the petition to the Court of
Appeals. Court of Appeals denied the petition and affirmed the decision of the NLRC. The
appellate court also denied SMC's motion for reconsideration. Hence, petitioner seeks this petition
for review.
ISSUE: Whether or not MAERC is a labor-only contractor and that complainants were employees of
SMC.
HELD: YES. MAERC is a labor-only contractor and not an independent labor contractor. While it is
true that MAERC had investments consisting of buildings, machinery and equipment, the Supreme
Court, however, in Vinoya v. NLRC, clarified that it was not enough to show substantial
capitalization or investment in the form of tools, equipment, machinery and work premises, etc.,
to be considered an independent contractor. In fact, jurisprudential holdings were to the effect
that in determining the existence of an independent contractor relationship, several factors may be
considered, such as, but not necessarily confined to, whether the contractor was carrying on an
independent business; the nature and extent of the work; the skill required; the term and duration
of the relationship; the right to assign the performance of specified pieces of work; the control and
supervision of the workers; the power of the employer with respect to the hiring, firing and
payment of the workers of the contractor; the control of the premises; the duty to supply premises,
tools, appliances, materials and labor; and the mode, manner and terms of payment. MAERC,
displayed the characteristics of a labor-only contractor and in labor-only contracting, the statute
creates an employer-employee relationship for a comprehensive purpose: to prevent a
circumvention of labor laws. The contractor is considered merely an agent of the principal
employer and the latter is responsible to the employees of the labor-only contractor as if such
employees had been directly employed by the principal employer. The principal employer therefore
becomes solidarily liable with the labor-only contractor for all the rightful claims of the employees.
Petitioner's liability is that of a direct employer and thus solidarily liable with MAERC.
INDEPENDENT JOB-CONTRACTOR; RADIO AND BROADCAST TALENTS
JOSE Y. SONZA vs. ABS-CBN BROADCASTING CORP.

G.R. No. 138051. June 10, 2004
CARPIO, J.:
FACTS: Respondent ABS-CBN signed an Agreement with the Mel and Jay Management and
Development Corporation. Referred to in the Agreement as "AGENT," MJMDC agreed to provide
SONZA's services exclusively to ABS-CBN as talent for radio and television. Sonza resigned as a
talent for ABS-CBN and sent a letter to Eugenio Lopez III rescinding the agreement of May 1994.
SONZA filed a complaint against ABS-CBN before DOLE NCR. He complained that ABS-CBN
did not pay his salaries, separation pay, service incentive leave pay, 13th month pay, signing bonus,
travel allowance and amounts due under the Employees Stock Option Plan ("ESOP"). ABS-CBN filed
a Motion to Dismiss on the ground that no employer-employee relationship existed between the
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parties and that Sonza was an independent contractor. The labor arbiter dismissed the complaint
for lack of jurisdiction. SONZA appealed to the NLRC, but it affirmed the Labor Arbiter's decision.
Sonza’s motion for reconsideration, was denied by the NLRC. Sonza filed special civil action for
certiorari with the CA which was likewise dismissed. Hence, this petition.
ISSUE: Whether or not, Sonza is an independent contractor.
HELD: Yes. There is no case law stating that a radio and television program host is an employee of
the broadcast station. SONZA maintains that all essential elements of an employer-employee
relationship are present in this case. Case law has consistently held that the elements of an
employer-employee relationship are: (a) the selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and (d) the employer's power to control the
employee on the means and methods by which the work is accomplished. The last element, the so-
called "control test", is the most important element.
A. Selection and Engagement of Employee

The specific selection and hiring of SONZA, because of his unique skills, talent and celebrity
status not possessed by ordinary employees, is a circumstance indicative, but not conclusive, of an
independent contractual relationship. In any event, the method of selecting and engaging SONZA
does not conclusively determine his status. We must consider all the circumstances of the
relationship, with the control test being the most important element.
B. Payment of Wages
ABS-CBN directly paid SONZA his monthly talent fees. Sonza alleges that the mode of fee
payment shows that he was an employee of ABS-CBN. However, all the talent fees and benefits
paid to SONZA were the result of negotiations that led to the Agreement. If SONZA were ABS-CBN's
employee, there would be no need for the parties to stipulate on benefits such as "SSS, Medicare,
and 13th month pay" which the law automatically incorporates into every employer-employee
contract. Whatever benefits SONZA enjoyed arose from contract and not because of an employer-
employee relationship. Further, Sonza’s huge talent fees indicate more an independent contractual
relationship rather than an employer-employee relationship. It was paid because of his skills, talent
and celebrity status. Bargaining power of fees way above the salary scales of ordinary employees is
a circumstance indicative, but not conclusive, of an independent contractual relationship.
C. Power of Control
Applying the control test to the present case, we find that SONZA is not an employee but
an independent contractor. The control test is the most important test our courts apply in
distinguishing an employee from an independent contractor. This test is based on the extent of
control the hirer exercises over a worker. The greater the supervision and control the hirer
exercises, the more likely the worker is deemed an employee. We find that ABS-CBN was not
involved in the actual performance that produced the finished product of SONZA's work. ABS-CBN
did not instruct SONZA how to perform his job. Clearly, ABS-CBN did not exercise control over the
means and methods of performance of SONZA's work. ABS-CBN's control was limited only to the
result of SONZA's work, whether to broadcast the final product or not. In either case, ABS-CBN must
still pay SONZA's talent fees in full until the expiry of the Agreement. Even though ABS-CBN
provided SONZA with the place of work and the necessary equipment, SONZA was still an
independent contractor since ABS-CBN did not supervise and control his work. ABS-CBN's sole
concern was for SONZA to display his talent during the airing of the programs.
LITIGATION ON THE MERITS
NOVELTY PHILIPPINES vs. COURT OF APPEALS

[G.R. No. 146125. September 17, 2003]
PANGANIBAN, J.:
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FACTS: Reform the Union Movement in Novelty (RUMN), the labor union of petitioner Novelty
Philippines Inc (Novelty) started assessing penalties against its erring members. RUMN’s executive
board adopted a resolution sanctioning union officers and members who failed to join big rallies,
with a penalty equivalent to their salary for one day. Novelty issued a Memorandum announcing
that it would deduct from the salaries of union members who failed to attend the mobilization
amounts equivalent to their one-day salary pursuant to the resolution of the RUMN. When some
members of the union allegedly complained of the salary deduction, petitioner temporarily held in
abeyance the implementation of the check-off on the special assessment made by RUMN. Petitioner
also requested the DOLE Sec. his opinion on the matter.
RUMN continued to insist on the implementation of the checkoff. Nevertheless, citing an

Opinion rendered by the legal office of the DOLE, petitioner rejected RUMN’s persistent demand of
a checkoff. Consequently, RUMN raised the matter for grievance. Since no settlement was reached
during the grievance procedure, the case was elevated to the NCMB. The voluntary arbitrators held
that there was sufficient compliance on the part of RUMN with the provisions of the Labor Code and
the CBA provisions between the parties.
After the denial of the petitioner’s motion for reconsideration with the panel of voluntary
arbitrators, petitioner Novelty elevated the matter to the CA by way of petition for certiorari under
Rule 65. The CA, however, denied the course to the petition for failure of the personnel office of
petitioner to attach (1) his authority to institute the action and (2) the required proof of service.
The MR was also denied by the CA because the required authority to file had been executed only
after 20 days from filing.
ISSUE: Whether or not the CA justified in dismissing the case despite petitioner’s substantial
compliance with the requirements of the rules.
HELD: No. Procedural niceties should be avoided in labor cases in which the provisions of the
Rules of Court are applied only in suppletory manner. Indeed, rules of procedure may be relaxed to
relieve a part of an injustice not commensurate with the degree of noncompliance with the process
required. The foregoing judicial policy acquires greater significance where there has been
subsequent compliance with the requirements of the rules, as in this case in which petitioner has
submitted the Special Power of Attorney together with its Motion for Reconsideration.
ANNULMENT OF JUDGMENTS OF NLRC
ELCEE FARMS, INC. vs. PAMPILO SEMILLANO and NLRC

[G.R. No. 150286. October 17, 2003]
AUSTRIA-MARTINEZ, J.:
FACTS: A complaint for illegal dismissal was filed by 144 employees before the Regional Arbitration
Branch of Bacolod City against (a) petitioners Elcee Farms and Saguemuller; and (b) Hilla
Corporation, Rey Hilado and Roberto Montaño. Of the 144 named complainants, only 28 submitted
their affidavits and evidence of employment. The Labor Arbiter ordered Hilla Corporation to pay
each of the 28 complainants their separation pay but dismissed all claims against Elcee Farms,
Saguemuller, Hilado and Montaño, for lack of merit. Not satisfied with the decision, private
respondents and Hilla Corporation appealed to the NLRC, which modified the decision of the Labor
Arbiter by holding all defendants liable for the payment of separation pay and adding the payment
of P5,000.00 as moral damages to each complainant for all the troubles and sufferings from the
disturbance of their rights to labor. All the parties moved for reconsideration. The NLRC issued a
Resolution modifying its decision by: (a) absolving Hilla Corporation from liability and held only
petitioners Elcee Farms and Saguemuller liable for the separation pay, moral and exemplary
damages; and (b) increasing the number of awardees from 28 to 131 based on the list of remitted
SSS contributions as of 1990. Petitioners filed petitions for certiorari with the Supreme Court under
Rule 65 of the Rules of Court through different counsels.

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The First Division of the SC gave due course to the second petition for certiorari and
required: (a) the petitioners to pay the deposit for costs; and, (b) both parties to submit their
respective memoranda. However, the said resolution was sent at another address instead of the
address provided for in the petition for certiorari. Thus, petitioners failed to comply. The Court
dismissed the petition for certiorari for non-compliance with said resolution requiring
abovementioned deposit for costs and memorandum. Said resolution was also sent to the wrong
address.
With the dismissal of the petition for certiorari, the NLRC Resolution became final and
executory. Petitioner Saguemuller filed before the NLRC a Motion to Stay Execution on the ground
of absolute nullity of decision. But, without awaiting the resolution of its pending motion with the
NLRC, petitioner Saguemuller together with Elcee Farms filed a petition for annulment of judgment
with the Court of Appeals. The Court of Appeals dismissed the petition for annulment of judgment
on ground of lack of jurisdiction. It held that petitioners cannot invoke the jurisdiction of the said
court pursuant to Rule 47 of the Rules of Court because said rule refers to decisions of regional trial
courts and not to quasi-judicial bodies. The appellate court also noted that petitioners had availed
of the relief of certiorari under Rule 65 before the Supreme Court but they were not diligent in
pursuing the same, to their prejudice. Petitioners filed a Motion for Reconsideration but the Court
of Appeals denied the same. Hence, this petition for review on certiorari anchored on the ground
that the Court of Appeals committed a reversible error when it refused to assume jurisdiction and
annul a patently unjust decision of the NLRC.
ISSUE: Whether or not the Court of Appeals has jurisdiction over petitions for annulment of
judgments of NLRC.
HELD: The appellate court has no jurisdiction to entertain a petition for annulment of a final and
executory judgment of the NLRC. Section 9 of BP 129 as amended, only vests in the Court of
Appeals “exclusive jurisdiction over actions for annulment of judgments of Regional Trial Courts.”
Moreover, annulment of judgment is allowed only where the ordinary remedies of new trial,
appeal, petition for relief or other appropriate remedies are no longer available through no fault of
petitioners. In this case, petitioners were well-aware that they had the available remedy of a
petition for certiorari to this Court under Rule 65 of the Rules of Court. In fact, they twice sought
recourse with this Court via petitions for certiorari but both petitions were dismissed.
The Court entertains serious apprehensions on the validity of the service of the Resolution
which required petitioners to deposit for costs and to submit their memorandum, non-compliance
of which inevitably caused the dismissal of their petition for certiorari. Petitioners claim that the
Resolution was not sent to the address of his counsel as expressly stated in the petition itself but to
counsel’s former address when the case was still with the NLRC. The Court is even more concerned
with the Resolution of the NLRC increasing the number of awardees from 28 to 131 which was
apparently based only on the list of remitted SSS contributions as of 1990 when it is an undisputed
fact that only 28 employees submitted their affidavits and evidence of employment before the
Labor Arbiter.
Be that as it may, such concerns cannot be raised and resolved in a petition for annulment
of judgment before the Court of Appeals or in the instant petition for review. They are proper
questions for resolution in the petition for certiorari before the First Division of this Court should it
decide to reinstate the petition, upon proper showing that the subject Resolution was indeed sent
to an incorrect address without the fault of petitioners but which unduly deprived petitioners of
opportunity to present their case.
Consequently, it is likewise not within the jurisdiction of this Court in the present petition
to act on private respondents’ motion for remand of the records and for the issuance of an order
directing the Labor Arbiter to issue a writ of execution.

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The petition for review on certiorari is DENIED for lack of merit but without prejudice to a
more appropriate remedy, if any.
FINAL AND EXEUTORY JUDGEMENTS OF NLRC
C-E CONSTRUCTION CORPORATION vs. NATIONAL LABOR RELATIONS COMMISSION

and GILBERT SUMCAD
PANGANIBAN, J.:
FACTS: Private Respondent Sumcad filed a Complaint for illegal dismissal against Petitioner,
alleging that he was a regular employee dismissed without cause and proper notice, and prayed for
reinstatement to his former position without loss of seniority rights, other privileges and benefits,
full back wages from the time of his illegal dismissal until his actual reinstatement, and attorney's
fees. Petitioner claimed that private respondent was a project — not a regular — employee, whose
services had been fully paid upon the completion of the project. It alleged that the Complaint
should be dismissed.
The Labor Arbiter (LA) ruled in favor of Sumcad. Petitioner was ordered to reinstate
Sumcad to his former position, with payment of full back wages from the time his salary had been
withheld until his actual reinstatement, pay differential, premium pay for holidays and rest days,
service incentive leaves, and 13th month pay for three (3) years counted backward from the date
the Complaint was filed, as well as attorney's fees. Unconvinced, petitioner appealed to the NLRC.
NLRC found Sumcad to be a regular employee and ordered the payment of his back wages
for one (1) year.NLRC issued an Entry of Judgment certifying that its Resolution had become final
and executory. Petitioner appealed to the CA. The CA held that, the Decision and Resolution,
being already final and executory, could no longer be subjected to a new trial and hearing. The CA
then ordered the LA to issue a writ of execution for the immediate reinstatement of private
respondent and the payment of his back wages. Hence, this Petition.
ISSUE: Whether or not the Court of Appeals may still modify a Final and Executory Decision of the
NLRC.
HELD: True, even after a judgment has become final and executory, an appellate court may still
modify or alter it when intervening circumstances render execution of that decision unjust and
inequitable. This principle does not apply, however, when the basis for modification is previously
existing evidence that a party fails to adduce during the hearing on the merits, despite ample
opportunity to do so. Here, there are no supervening events that would make the issuance of a writ
of execution unjust.
Settled is the rule that, except for correction of clerical errors, final and executory
judgments can neither be amended nor altered, even if the purpose is to correct erroneous
conclusions of fact or of law. Thus, petitioner cannot be allowed to present evidence again,
especially when that which it seeks to present is unnecessary. Under Republic Act No. 6715, an
illegally dismissed employee is entitled to full back wages, without any diminution or reduction by
earnings derived elsewhere during the period of illegal dismissal.
ART. 221: TECHNICALITIES ARE NOT STRICTLY APPLIED IN LABOR CASES
PHILIPPINE AIRLINES, INC. vs. ARTHUR B. TONGSON

[G.R. No. 153157. October 14, 2003.]
FACTS: Jacqueline Tanedo and her family were at counter No. 29 of the Manila Station
International to check-in for flight No. 102 of PAL bound for Los Angeles, California, when one of
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its employees, Joseph Arriola, approached her and asked if they have already paid the required
travel taxes. Responding in the negative, Ms. Tanedo and her family followed Arriola at counter No.
36 for the processing of their travel documents and gave him their travel documents and the
amount of P2,000.00 as payment for their discounted travel taxes.He did not issue the
corresponding receipt but issued boarding passes to her children.
At about the same time, another PAL employee, Arthur B. Tongson volunteered to assist
Ms. Tanedo and her family in completing their travel documents and in obtaining the boarding
passes for her and her husband. Upon receipt of their boarding passes, Ms. Tanedo realized that
their seats were apart from each other. Arriola assured her that the stewardess would make the
necessary arrangement to enable them to be seated together. But when they boarded the plane, no
such arrangement was made. Thus, they opted to take the succeeding flight scheduled the
following day. When Ms. Tanedo and her family were checking-in they were again charged the
amount of P3,240.00, representing their travel taxes, which they reluctantly paid. This prompted
Ms. Tanedo to file with the Philippine Airlines, Inc., herein petitioner, a written complaint against
Arriola and respondent Tongson.
After a thorough investigation, petitioner charged both Arriola and respondent Tongson
with corruption, extortion and bribery under the company's Code of Discipline. Subsequently
petitioner conducted clarificatory hearings, but respondent and Arriola failed to appear despite
notice. PAL found them guilty of serious misconduct (corruption, extortion, bribery)
Respondent filed with the Labor Arbiter a complaint against petitioner for illegal dismissal.
After the submission of the parties' pleadings and position papers, the Labor Arbiter rendered a
Decision finding respondent guilty of serious misconduct and upholding petitioner's notice
dismissing him from the service, which was subsequently affirmed by the NLRC. However the Court
of Appeals reversed it on the ground that "Jacqueline's complaint/report cannot be considered as
substantial evidence of the commission of corruption by conspiracy for not only was this not
verified or sworn under oath. Jacqueline was never presented or her deposition taken in order to
give Tongson a chance to cross-examine her. This piece of evidence is thus hearsay and of no
probative value.”
ISSUE: Whether or not the complaint/report and deposition are hearsay.
HELD: No. The proceedings before the Labor Arbiter and the NLRC are non-litigious in nature as
provided for in Section 6, Rule V of the NLRC Rules of Procedure, as amended. The argument that
the affidavit is hearsay because the affiants were not presented for cross-examination is not
persuasive because the rules of evidence are not strictly observed in proceedings before
administrative bodies like the NLRC, where decisions may be reached on the basis of position
papers only. Article 221 of the Labor Code allows the NLRC and the Labor Arbiter to decide a case
on the basis of position papers and other documents submitted by the parties without resorting to
technical rules of evidence as observed in regular courts of justice.
ART. 221:TECHNICAL RULES NOT STRICTLY APPLIED IN LABOR CASES.
PRUDENCIO TANJUAN vs. PHILIPPINE POSTAL SAVINGS BANK, INC

[G.R. No. 155278. September 16, 2003.]
PANGANIBAN, J.:
FACTS: Petitioner Prudencio Tanjuan was employed by respondent Philippine Postal Savings Bank,
Inc. (PPSBI), a government financing institution and a subsidiary of the Philippine Postal
Corporation (Philpost), as Property Appraisal Specialist and Officer-in-Charge of its Credit
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Supervision and Control Department. Respondent Pedrito Torres, PPSBI President and CEO, issued
Memorandum 145-98 addressed to petitioner and five other employees belonging to its Account
Management Dept and Credit Supervision and Control Dept. charging them with negligence in the
performance of duties and misrepresentation in violation of the bank’s rules for approving the
applications for loan of Corinthian de Tagaytay and Clavecilla Marine Service. They were given five
days to submit written explanations. Petitioner submitted his explanation alleging that he merely
validated the findings of the Property Appraiser.
Respondent Torres informed petitioner of his preventive suspension for a period of 90 days
in view of the pending administrative investigation against him. Petitioner countered that the
preventive suspension should not exceed 30 days as stated in the Labor Code. Respondent Torres
issued OP Order No. 011-99 amending of the order of preventive suspension against the former from
90 days to 30 days.
The Board of Directors of PPSBI approved the bank’s reorganization via retrenchment of
employees and re-alignment of functions and positions for the purpose of preventing further
business losses. Torres wrote a letter addressed to all employees informing them of the impending
reorganization and enjoining them to apply for their desired positions. Petitioner did not apply for
any position in the new organizational set-up. Petitioner then received a Notice of Termination
informing him that his employment shall cease 30 calendar days from date of receipt of notice on
the ground of abolition of the position. Petitioner filed a case of illegal dismissal with money
claims.
The Labor Arbiter rendered a decision declaring PPSBI guilty of illegal dismissal and
ordering it to reinstate petitioner to his former position, which may have a new title. Respondent
appealed the decision to the NLRC stating that the arbiter hastily decided the case even if they did
not adduce evidence to support their claim of business losses. They presented audited consolidated
statements of conditions, income and loss statements, statement of financial conditions, and COA
annual audit report among other things.
NLRC issued a resolution admitting the evidence presented by respondents on appeal and
finding the same adequate to prove the existence of serious business losses. Dissatisfied with the
ruling of the NLRC, petitioner elevated the case to CA. The CA affirmed the NLRC ruling.
ISSUES:
(1) Whether or not the respondent PPSBI is barred from attaching as annexes to the
Memorandum on Appeal evidence not submitted to the Labor Arbiter;
(2) Whether or not the petitioner was validly terminated.
HELD:
(1) No. It is well settled that the NLRC is not precluded from receiving evidence even for
the first time on appeal, because technical rules of procedure are not binding in labor cases. This
rule applies equally to both the employee and the employer. In the interest of due process, the
Labor Code directs labor officials to use all reasonable means to ascertain the facts speedily and
objectively with little regard to technicalities and formalities. However, delay in the submission of
evidence should be clearly explained and should adequately provide the employer’s allegation of
the cause of termination. In the instant case, the respondents reserved the right to introduce
evidence to the labor arbiter, if and when required to do so. Reasons of confidentiality and the
volatile nature of PPSBI’s business as a banking institution prompted respondents to limit the
presentation of evidence at the outset. Indeed it would be foolhardy for the NLRC and the CA to
reject the evidence, just because it had not been presented before the labor arbiter. Such
evidence was absolutely necessary to resolve the issue of whether the petitioner’s employment was
validly terminated.
(2) Yes. The petitioner was validly terminated on the reason of serious business losses.
Both the NLRC and the CA found that the audited financial statements submitted by respondents
adequately supported their claim of actual, real, and substantial losses. The findings of the CA,
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affirming those of the NLRC showed real and grave financial reverses, which made downsizing the
only recourse for the bank to follow. Indeed, retrenchment of the petitioner was the consequence
of the bank’s reorganization and a cost saving device recognized by jurisprudence.
ART. 221: TECHNICALITIES ARE NOT STRICTLY APPLIED IN LABOR CASES
VAN MELLE PHILS. vs. VICTOR M. ENDAYA

[G.R. No. 143132. September 23, 2003.]
CALLEJO, SR., J.:

FACTS: Victor Endaya filed a Complaint with the National Labor Relations Commission (NLRC)
against Van Melle Phils., Inc. (VMPI) for Illegal Dismissal/Constructive Dismissal. Instead of filing an
Answer to the complaint, petitioners filed a motion to dismiss the same on the ground that the SEC,
and not the labor arbiter, had jurisdiction over the complaint pursuant to Section 5 of P.D. No. 902-
A. They claimed that the controversy between the complainant and the respondents was an intra-
corporate controversy, involving as it was the election of a corporate officer of the respondent
VMPI.
The respondent opposed the motion to dismiss, insisting that the NLRC, not the SEC, had
exclusive jurisdiction over the complaint because his dismissal as president and general manager of
the respondent VMPI was not effected through a resolution of the Board of Directors and,
therefore, was not a corporate act. He averred that his dismissal could not be considered as an
intra-corporate controversy because no such election or appointment of Niels Have or his
representative took place. He also averred that he was constructively dismissed by his immediate
superior because of racial discrimination. He insisted that the dispute between him and the
respondents was a labor dispute, within the context of Article 212, Paragraph 1 of the Labor Code
of the Philippines; hence, the case was within the exclusive jurisdiction of the NLRC.
Labor Arbiter Manuel P. Asuncion issued an order stating that the ground invoked by the
respondents therein in their motion to dismiss was treated as a matter of defense considering that
the intricate issues involved in the said motion were legal and factual, necessitating the
presentation of the respective contentions of the parties in evidence. The labor arbiter held the
resolution of the motion in abeyance until after the parties submitted their respective position
papers.
The petitioners filed with the Court of Appeals (CA) a petition for certiorari with a prayer
for injunctive relief against the complainant and the labor arbiter. The CA issued a Resolution
denying due course and dismissing the petition for failure of the petitioners to comply with Section
3, Rule 46 of the 1997 Rules of Civil Procedure. The petitioners filed a motion for reconsideration
of the CA resolution. The CA denied the petitioners' motion for reconsideration. Hence the present
petition.
ISSUE: Whether the labor arbiter had exclusive jurisdiction over a complaint involving the election
of a member of the board of directors and a corporate officer, patently an intra-corporate
controversy between the private respondent and the petitioners, and a matter within the exclusive
jurisdiction of the SEC as provided for in a Sec. 5 of Presidential Decree No. 902-A.
HELD: The petition is meritorious. SC agree with the petitioners that even assuming that the Rules
require all attachments to a petition for certiorari to be certified true copies, the CA should have
nevertheless taken cognizance of the petition. It has been the consistent holding of the Supreme
Court that cases should be determined on the merits, after full opportunity to all parties for
ventilation of their causes and defenses, rather than on technicality or some procedural
imperfections. In so doing, the ends of justice would be better served. Rules of procedure are mere
tools designed to expedite the decision or resolution of cases and other matters pending in court. A

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strict and rigid application of the rules that would result in technicalities that tend to frustrate
rather than promote substantial justice must be avoided.
Thus, in dismissing the petition before it, the appellate court clearly put a premium on
technicalities and simply brushed aside the issue posed by the petitioners — whether the labor
arbiter committed a grave abuse of his discretion amounting to lack or excess of jurisdiction in
denying the respondent's motion to dismiss on the ground that the SEC (now the RTC) had exclusive
jurisdiction over the said complaint.
PERFECTION OF APPEAL
CORPORATE INN HOTEL, ET AL. vs. JENNEVIE H. LIZO

G.R. No. 148279 May 27, 2004
FACTS: Corporate Inn Hotel, petitioner, engaged the services of Jennevie Lizo, respondent, as a
probationary account executive. Petitioner received complaints from its clients against her for
undesirable conduct. Her performance was evaluated after which she was recommended to
undergo an additional training under maximum supervision. Twenty-one (21) days after her
employment, petitioner terminated her services. She filed with the Labor Arbiter a complaint for
illegal dismissal and other monetary claims against petitioner.The Labor Arbiter rendered Lizo was
illegally dismissed. On appeal, NLRC dismissed the same for being late. Petitioners filed a motion
for reconsideration but was denied by the NLRC in a Resolution.Petitioners filed with the Court of
Appeals a petition for certiorari. CA affirrmed in toto the NLRC Resolution.
ISSUE: Whether or not, the mandatory 10-day period of perfecting an appeal from the decision of
the Labor Arbiter may be disregarded.
HELD: No. At the outset, it bears stressing that the right to appeal is a statutory right and one who
seeks to avail of the right must comply with the statute or rules. The NLRC Rules, akin to the Rules
of Court, promulgated by authority of law, have the force and effect of law. Thus, petitioners are
mandated to perfect their appeal in the manner and within the period permitted by law and failure
to do so renders the judgment of the Labor Arbiter final and executory. Under Article 223 of the
Labor Code, a decision of a Labor Arbiter is final and executory unless appealed to the National
Labor Relations Commission by any or both of the parties within ten (10) days from notice of the
said Decision. Thus, the perfection of an appeal within the reglementary period for the same is
jurisdictional in character.
BINDING EFFECT OF THE DECISION OF THE NLRC; REDUNDANCY
BONIFACIO ASUFRIN, JR. vs. SAN MIGUEL CORPORATION

[G.R. No. 156658. March 10, 2004]
YNARES-SANTIAGO:
FACTS: Coca Cola Plant, then a department of respondent San Miguel Beer Corporation (SMC),
hired petitioner as a utility/miscellaneous worker. He became a monthly paid employee promoted
as Stock Clerk. Sometime in 1984, the sales office and operations at the Sum-ag, Bacolod City Sales
Office were reorganized. Several positions were abolished including petitioner’s position as Stock
Clerk. After reviewing petitioner’s qualifications, he was designated warehouse checker at the
Sum-ag Sales Office.
Respondent SMC thereafter wrote a letter to petitioner informing him that, owing to the
implementation of the “pre-selling operations” scheme, all positions of route and warehouse
personnel will be declared redundant and the Sum-ag Sales Office will be closed effective April 30,
1996. Thereafter, the employees of Sum-ag sales force were informed that they can avail of
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respondent’s early retirement package pursuant to the retrenchment program, while those who will
not avail of early retirement would be redeployed or absorbed at the Brewery or other sales
offices. Petitioner opted to remain and manifested to Acting Personnel Manager Salvador Abadesco
his willingness to be assigned to any job, considering that he had three children in college.
Petitioner was surprised when he was informed by the Acting Personnel Manager that his
name was included in the list of employees who availed of the early retirement package.
Petitioner’s request that he be given an assignment in the company was ignored by the Acting
Personnel Manager.
Petitioner thus filed a complaint for illegal dismissal with the NLRC. The Labor Arbiter
dismissed the complaint for lack of merit. Petitioner appealed to the National Labor Relations
Commission (NLRC) which set aside the Labor Arbiter’s decision and ordered respondent SMC to
reinstate petitioner to his former or equivalent position with full backwages. Respondent filed a
petition with the Court of Appeals which reversed the decision of the NLRC and reinstated the
judgment of the Labor Arbiter dismissing the complaint for illegal dismissal. Petitioner’s motion for
reconsideration was denied.
ISSUES: Whether or not the dismissal of petitioner is based on a just and authorized cause.
HELD: In the case at bar, petitioner was dismissed on the ground of redundancy, one of the
authorized causes for dismissal. In Dole Philippines, Inc. v. NLRC, citing the leading case of
Wiltshire File Co., Inc. v. NLRC, we explained the nature of redundancy as an authorized cause for
dismissal thus: “Redundancy in an employer’s personnel force necessarily or even ordinarily refers
to duplication of work. That no other person was holding the same position that private respondent
held prior to the termination of his services, does not show that his position had not become
redundant. Indeed, in any well-organized business enterprise, it would be surprising to find
duplication of work and two (2) or more people doing the work of one person. We believe that
redundancy, for purposes of the Labor Code, exists where the services of an employee are in excess
of what is reasonably demanded by the actual requirements of the enterprise.
The determination that employee’s services are no longer necessary or sustainable and,
therefore, properly terminable is an exercise of business judgment of the employer. The wisdom or
soundness of this judgment is not subject to discretionary review of the Labor Arbiter and the
NLRC, provided there is no violation of law and no showing that it was prompted by an arbitrary or
malicious act. In other words, it is not enough for a company to merely declare that it has become
overmanned. It must produce adequate proof that such is the actual situation to justify the
dismissal of the affected employees for redundancy. Respondent “has not shown how the cessation
of operations of the Sum-ag Sales Office contributed to the ways and means of improving
effectiveness of the organization with the end in view of efficiency and cutting distribution
overhead and other related costs. Respondent, thus, clearly resorted to sweeping generalization[s]
in dismissing complainant.” It bears stressing that whether it be by redundancy or retrenchment or
any of the other authorized causes, no employee may be dismissed without observance of the
fundamentals of good faith.
To quote what has been aptly stated by former Governor General Leonard Wood in his
inaugural message before the 6th Philippine Legislature on October 27, 1922 “labor is neither a
chattel nor a commodity, but human and must be dealt with from the standpoint of human
interest.” Accordingly, petitioner’s dismissal is declared illegal, and respondent is ordered to
reinstate him to his former or equivalent position, with full backwages computed from date of
dismissal up to his actual reinstatement. Respondent is likewise ordered to pay petitioner the sum
equivalent to ten percent (10%) of his total monetary award as attorney’s fees.
COMPUTATION OF BENEFITS; ASPECTS OF DUE PROCESS

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BOLINAO SECURITY AND INVESTIGATION SERVICE, INC. vs. ARSENIO M. TOSTON
[G.R. No. 139135. January 29, 2004]
FACTS: Arsenio M. Toston, respondent, was employed as a security guard by petitioner. Eventually,
petitioner assigned respondent at the United States Agency for International Development (USAID)
situated Taguig, Metro Manila. While on duty, petitioner was shot by another guard when informed
the latter that he is being investigated in the alleged illegal lotto betting within the company
premises.
Respondent then filed with petitioner an application for a one month leave of absence as
well as sickness and/or medical benefits. While petitioner approved his one-month leave of
absence, however, it rejected his claim for benefits. This prompted respondent to file with the SSS
an application for sickness/medical benefits. At this instance, he came to know that petitioner
failed to remit to the SSS its monthly contributions for nine (9) consecutive months. Consequently,
he reported the matter to the SSS.
Lucy Caasi, in-charge of remitting petitioner’s contributions to the SSS, scolded and
rebuked respondent and told him not to report for work and that his name would be “dropped from
the rolls.” Respondent filed with the Labor Arbiter a complaint against petitioner and its
president, Urbano S. Caasi, Jr., for illegal dismissal and non-payment of wages and other benefits,
with prayer for reinstatement and payment of full backwages. Petitioner sent a letter to
respondent declaring him absent without leave (AWOL). He could not report then for work due to
the pendency of his complaint with the Labor Arbiter. After conducting an investigation, USAID
submitted its report to petitioner recommending that respondent and Nicolas be relieved from their
posts.
The Labor Arbiter ordered that respondent was illegally dismissed from employment and
ordering petitioner to reinstate him to his former position and to pay his full backwages. Upon
appeal, the NLRC affirmed with modification the Arbiter’s assailed Decision in the sense that the
award of moral and exemplary damages was deleted. Petitioner filed a motion for reconsideration
but was denied. Thereafter, petitioner filed with this Court a petition for certiorari. The Court of
Appeals rendered a Decision affirming in toto the NLRC Decision and Resolution. Petitioner filed a
motion for reconsideration but was denied by the Appellate Court. Hence, this petition for review
on certiorari.
ISSUE: Whether or not respondent was illegally dismissed from employment.
HELD: We agree with the Court of Appeals that respondent’s dismissal from the service was without
justifiable cause and without notice and hearing as required by the Labor Code and its
Implementing Rules. In the case at bar, there is no showing of a clear, valid and legal cause which
justifies respondent’s removal from employment. Neither did petitioner serve two written notices
to respondent prior to his termination from employment as required by the Labor Code. Clearly,
this is a case of illegal dismissal.
It is a settled doctrine that “the employer has the burden of proving the lawfulness of his
employee’s dismissal. The validity of the charge must be clearly established in a manner consistent
with due process. The Implementing Rules of the Labor Code provide that no worker shall be
dismissed except for a just or authorized cause provided by law and after due process. This
provision has two aspects: (1) the legality of the act of dismissal, that is, dismissal based on the
grounds provided by Article 282 of the Labor Code, and (2) the legality in the manner of dismissal.
The illegality of the act of dismissal constitutes discharge without just cause, while illegality in the
manner of dismissal is dismissal without due process.” Clearly, petitioner failed to discharge its
burden.
Respondent who was illegally dismissed from work is actually entitled to reinstatement
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compensation was withheld from him up to the time of his actual reinstatement.
However, the circumstances obtaining in this case do not warrant the reinstatement of
respondent. Apparently, antagonism caused a severe strain in the relationship between him and
petitioner company. A more equitable disposition would be an award of separation pay equivalent
to at least one month pay, or one month pay for every year of service, whichever is higher (with a
fraction of at least six (6) months being considered as one (1) whole year), in addition to his full
backwages, allowances and other benefits.
ILLEGAL DISMISSAL; ITS CONSEQUENCES
TOMAS CLAUDIO MEMORIAL COLLEGE, INC. vs. COURT OF APPEALS

[G.R. No. 152568. February 16, 2004]
CALLEJO, SR., J.:

FACTS: Private respondent Pedro Natividad started working with petitioner Tomas Claudio
Memorial College (TCMC) in Morong, Rizal. In time, he was promoted as “Liason Officer” of the
school with the Department of Education, Culture and Sports (DECS) and with the Commission on
Higher Education (CHED) with the rank of Assistant Registrar.
The private respondent was arrested by the Morong police authorities, without any warrant
therefore, for violation of the Dangerous Drugs Act (Republic Act NO. 6425). A criminal complaint
was later filed against him. A preliminary investigation was conducted by the Municipal Court of
Morong, Rizal which found probable cause to hold him for trial. The court, on the said date, issued
a warrant for the private respondent’s arrest. The petitioner, through its president, Aladdin F.
Trinidad, sent a Memorandum to the private respondent informing him that his employment was
already terminated. The private respondent was thenceforth barred from entering the school
without the petitioner’s approval. The private respondent posted a bail bond and was released
from his detention cell. He did not, however, file any complaint against the petitioner with the
NLRC on account of his dismissal. The case was dismissed for lack of merit.
The private respondent was arrested anew by police authorities for violation of Section 27,
Article III of Rep. Act No. 6425, as amended. On said date, the private respondent posted a bail
bond and was released from detention. The private respondent filed a complaint with the NLRC
against the petitioner for illegal dismissal. The private respondent executed a sworn statement
claiming that (a) there was no factual basis for his dismissal; and (b) he was deprived of his rights
to due process.
Acting Executive Labor Arbiter Pedro C. Ramos, rendered a decision dismissing the
complaint for lack of legal basis. The private respondent appealed the decision to the NLRC which
affirmed the same. The NLRC also denied the private respondent’s motion for the reconsideration
of the said decision. However, on certiorari with the Court of Appeals, the appellate court
affirmed, with modification, the decision of the NLRC, holding that although there was a valid
cause for the private respondent’s dismissal, the petitioner did not follow the procedure for the
termination of his employment. The petitioner’s motion for reconsideration was denied by the
Court of Appeals.
ISSUE: Whether or not private respondent was illegally dismissed thus entitling him to backwages.
HELD: The normal consequences of a finding that an employee has been illegally dismissed are,
firstly, that the employee becomes entitled to reinstatement to his former position without loss of
seniority rights and secondly, the payment of backwages corresponding to the period from his
illegal dismissal up to actual reinstatement. The statutory intent on this matter is clearly
discernible. Reinstatement restores the employee who was unjustly dismissed to the position from
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which he was removed, that is, to his status quo ante dismissal, while the grant of backwages
allows the same employee to recover from the employer that which he had lost by way of wages as
a result of his dismissal. These twin remedies-reinstatement and payment of backwages – make the
dismissed employee whole who can then look forward to continued employment. Thus do these two
remedies give meaning and substance to the constitutional right of labor to security of tenure. The
two forms of relief are distinct and separate, one from the other. Though the grant of
reinstatement commonly carries with it an award of backwages, the inappropriateness or non-
availability of one does not carry with it the inappropriateness or non-availability of the other.
The award of backwages is not conditioned on the employee’s ability or inability to, in the
interim, earn any income. While it may be true that the private respondent was detained in
Criminal Case No. 5137, the State Prosecutor found no probable cause for the detention of the
private respondent and resolved to dismiss the case. The private respondent has not yet been
convicted by final judgment in Criminal Case No. 5251. Indeed, he is presumed innocent until his
guilt is proved beyond reasonable doubt.
FINDINGS OF FACT OF CA; WHEN BINDING TO THE SUPREME COURT
GALLERA DE GUISON HERMANOS, INC., ET AL. vs. MA. ASUNCION C. CRUZ

G.R. No. 159390 June 10, 2004
TINGA, J.:
FACTS: Private respondent Ma. Asuncion G. Cruz was a cashier and stockholder of Petitioner
Gallera de Guison Hermanos, Inc. Gallera is engaged in the operation and maintenance of a cockpit
arena in Quezon City and petitioners Carlos H. Reyes, Sr. and Pacita G. Reyes are the chairman of
the Board of Directors and President, respectively thereof. Private respondent wrote Gallera
requesting that she be assigned as Liaison Officer. Atty. Sumawang, Gallera’s counsel, informed
her through a letter that the Board is not in a legal position to consider the request because an
employee cannot be appointed to another position which would result in the reduction of his
existing salary and that the duties and responsibilities of a Liaison Officer are already being
performed by some of the management staff.
Due to the alleged ill treatment and harassment by the management, the latter procured a
medical certificate and went on sick leave. Atty. Sumawang, wrote private respondent to report
for work on a no work no pay basis in the meantime that the management is studying to which
position private respondent will be transferred. In 22 payrolls, she was designated as liason officer.
Her designation as liason officer was removed. Thereafter, the private respondent did not report
for work. Nevertheless, she was asked to return to work on a “no work, no pay basis,” except the
allowances and other cash entitlements to the position. Private respondent filed with the
Department of Labor, NCR, a complaint for illegal dismissal. Meanwhile, Galera (sic) notified
private respondent thru a letter that the latter should report for work and explain why private
respondent has not been reporting for work. The labor arbiter issued a decision declaring private
respondent to have been illegally dismissed.
ISSUE: Whether or not Cruz was dismissed for cause.
HELD: Indeed, the instant petition raises a fundamental factual issue which has already been
exhaustively discussed and passed upon by the Labor Arbiter and the Court of Appeals which ruled
that Cruz was illegally dismissed and the dismissal was attended by bad faith on the part of the
petitioners; hence, the petitioners are solidarily liable for Cruz’ monetary claims consisting of
separation pay, backwages and attorney’s fees.
We stated then, “time and again the much-repeated but not so well-heeded rule that
findings of fact of the Court of Appeals, particularly where it is in absolute agreement with that of
the NLRC and the Labor Arbiter, as in this case, are accorded not only respect but even finality and
are deemed binding upon this Court so long as they are supported by substantial evidence.” We
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reiterate the statement in this case. After a careful consideration of the records of this case, we
find no reason to disturb the unanimous findings and conclusions of the Court of Appeals, NLRC and
the Labor Arbiter.
VALIDITY OF COMPROMISE AGREEMENTS
R & E TRANSPORT, INC. vs. AVELINA P. LATAG, rep.her deceased husband, PEDRO M. LATAG
[G.R. No. 155214. February 13, 2004]
PANGANIBAN:
FACTS: Pedro Latag was a regular employee of La Mallorca Taxi. When La Mallorca ceased from
business operations, Latag transferred to R & E Transport, Inc. He was receiving an average daily
salary of five hundred pesos (P500.00) as a taxi driver. Latag got sick and was forced to apply for
partial disability with the SSS, which was granted. When he recovered, he reported for work but
was no longer allowed to continue working on account of his old age. He asked Felix Fabros, the
administrative officer of petitioners, for his retirement pay pursuant to Republic Act 7641 but he
was ignored. Thus, he filed a case for payment of his retirement pay before the NLRC. Latag
however died and subsequently, his wife, Avelina Latag, substituted him. The Labor Arbiter
rendered a decision in favor of Latag.
Respondent Avelina Latag, with her then counsel, was invited to the office of petitioners’
counsel and was offered the amount of P38,500.00, which she accepted. Respondent was also asked
to sign an already prepared quitclaim and release and a joint motion to dismiss the case.
Thereafter, the Labor Arbiter issued an order that decision stands and the Labor Arbitration
Associate is directed to prepare the Writ of Execution in due course.
Petitioners interposed an appeal before the NLRC which the latter dismissed for failure to
post a cash or surety bond, as mandated by law. Petitioners filed a motion for reconsideration of
the above resolution. The NLRC came out with the assailed decision, which gave due course to the
motion for reconsideration. Respondent appealed to the CA, contending that under Article 223 of
the Labor Code and Section 3, Rule VI of the New Rules of Procedure of the NLRC, an employer’s
appeal of a decision involving monetary awards may be perfected only upon the posting of an
adequate cash or surety bond.
According to the appellate court, because petitioners’ appeal before the NLRC was not
accompanied by an appropriate cash or surety bond, such appeal was not perfected. The CA thus
ruled that the labor arbiter’s January 10, 2000 Decision and May 23, 2000 Order had already
become final and executory. Hence, this Petition.
ISSUES:
1. Whether the CA acted properly when it overturned the NLRC’s factual findings.
2. Whether the labor arbiter’s Order of May 23, 2000 involved a monetary award.
HELD: The Petition is partly meritorious.
(1) The power of the CA to review NLRC decisions via a Rule 65 petition is now a settled
issue. As early as St. Martin Funeral Homes v. NLRC, we have definitively ruled that the proper
remedy to ask for the review of a decision of the NLRC is a special civil action for certiorari under
Rule 65 of the Rules of Court, and that such petition should be filed with the CA in strict
observance of the doctrine on the hierarchy of courts. Moreover, it has already been explained that
under Section 9 of Batas Pambansa 129, as amended by Republic Act 7902, the CA -- pursuant to
the exercise of its original jurisdiction over petitions for certiorari -- was specifically given the
power to pass upon the evidence, if and when necessary, to resolve factual issues.

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Likewise settled is the rule that when supported by substantial evidence, factual findings
made by quasi-judicial and administrative bodies are accorded great respect and even finality by
the courts. These findings are not infallible, though; when there is a showing that they were
arrived at arbitrarily or in disregard of the evidence on record, they may be examined by the
courts. Hence, when factual findings of the NLRC are contrary to those of the labor arbiter, the
evidentiary facts may be reviewed by the appellate court. Such is the situation in the present case;
thus, the doors to a review are open.
As to the Quitclaim and Waiver signed by Respondent Avelina Latag, the appellate court
committed no error when it ruled that the document was invalid and could not bar her from
demanding the benefits legally due her husband. This is not say that all quitclaims are invalid per
se. Courts, however, are wary of schemes that frustrate workers’ rights and benefits, and look with
disfavor upon quitclaims and waivers that bargain these away. Courts have stepped in to annul
questionable transactions, especially where there is clear proof that a waiver, for instance, was
wangled from an unsuspecting or a gullible person; or where the agreement or settlement was
“unconscionable on its face.” A quitclaim is ineffective in barring recovery of the full measure of a
worker’s rights, and the acceptance of benefits therefrom does not amount to estoppel. Moreover,
a quitclaim in which the consideration is “scandalously low and inequitable” cannot be an obstacle
to the pursuit of a worker’s legitimate claim.
(2) We cannot concur, however, in petitioners’ other contention that the May 23, 2000
Order did not involve a monetary award. The rules implementing the New Retirement Law similarly
provide the formula for computing the one-half month salary. Since Pedro was paid according to
the “boundary” system, he is not entitled to the 13th month and the service incentive pay; hence,
his retirement pay should be computed on the sole basis of his salary.
It is accepted that taxi drivers do not receive fixed wages, but retain only those sums in
excess of the “boundary” or fee they pay to the owners or operators of their vehicles. Thus, the
basis for computing their benefits should be the average daily income. In this case, the CA found
that Pedro was earning an average of five hundred pesos (P500) per day. We thus compute his
retirement pay as follows: P500 x 15 days x 14 years of service equals P105,000. Compared with
this amount, the P38,850 he received, which represented just over one third of what was legally
due him, was unconscionable.
As amended, this provision explicitly provides that an appeal from the labor arbiter’s
decision, award or order must be made within ten (10) calendar days from receipt of a copy thereof
by the party intending to appeal it; and, if the judgment involves a monetary award, an appeal by
the employer may be perfected only upon the posting of a cash or surety bond. Nonetheless,
procedural lapses may be disregarded because of fundamental considerations of substantial justice
or because of the special circumstances of the case combined with its legal merits or the amount
and the issue involved.
PAYMENT OF APPEAL BOND
FILIPINAS SYSTEMS "FILSYSTEMS," INC. vs. NATIONAL LABOR RELATIONS COMMISSION

[G.R. No. 153859. December 11, 2003.]
QUISUMBING J.:
FACTS: A complaint for illegal dismissal and monetary claims for service incentive leave, 13th
month pay and night shift differential was filed by respondents against petitioners before the
National Labor Relations Commission. The complaint was assigned to Labor Arbiter Donato G.
Quinto, Jr. who ordered the parties to file their position paper. Respondents complied, but not the
petitioners despite several warnings and time extensions. The inaction was construed as a waiver
by petitioners of their right to present evidence.

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The Labor Arbiter decided the complaint on the merit and ruled in favor of respondents. He
sustained their claim of illegal dismissal as petitioners failed to adduce contrary evidence.
Petitioners were ordered to reinstate respondents. The monetary claims of the respondents were
likewise granted.
Petitioners appealed to the National Labor Relations Commission. For the first time, they
submitted evidence that respondents were project employees and that their dismissal was due to
the discontinuation of the Jaka Tower I project where they were assigned. Respondents, however,
assailed the jurisdiction of the NLRC over the appeal for failure of the petitioners to file the appeal
bond within the ten (10)-day reglementary period. They further contended that it was too late for
petitioners to present evidence in the NLRC. The NLRC nevertheless assumed jurisdiction over the
appeal. Due to the evidence presented by petitioners on the issue of illegal dismissal, it remanded
the case to the Labor Arbiter for further proceedings. Respondents' motion for reconsideration was
denied.
Respondents then repaired to the Court of Appeals on a Petition for Certiorari. The
appellate court ruled that the NLRC did not have jurisdiction over the appeal since the appeal bond
of the petitioners was filed out of time. It reinstated the decision of the Labor Arbiter. Petitioners'
motion for reconsideration proved futile.
ISSUE: Whether or not the Court of Appeals erred and committed grave abuse of discretion in
finding and ruling that the NLRC has not acquired jurisdiction on the appeal of the petitioners for
submitting an appeal bond seven (7) days beyond the ten (10)-day reglamentary period in
perfecting an appeal;
HELD: Payment of the appeal bond is a jurisdictional requisite for the perfection of an appeal to
the NLRC. It is only in rare instances that the court relaxes the rule upon a showing of substantial
compliance with it and to prevent patent injustice.
In the case at bar, petitioners alleged that they received a copy of the Arbiter's decision on
October 31, 1998. Their memorandum of appeal was dated November 9, 1998, but their appeal
bond to stay execution of the decision was executed only on November 17, 1998. The records show
no partial payment of the bond was made during the reglementary period nor was there any
explanation for its late filing. Given these facts, the late filing of the bond divested the NLRC of its
jurisdiction to entertain petitioners' appeal.
Likewise, we cannot countenance the late submission of petitioners' evidence with the
NLRC. Petitioners should have adduced their evidence on the issue of illegal dismissal before the
Labor Arbiter. They failed to do so despite the opportunities given to them by the Arbiter. It was
only when an adverse decision was rendered against them by the Arbiter that they offered to
submit their evidence before the NLRC refuting respondents' complaint of illegal dismissal. Such a
practice cannot be tolerated for it will defeat the speedy administration of justice involving our
poor workers. Moreover, it smacks of unfairness. Petitioners should have filed the present petition
within fifteen days under Rule 45 of the Rules of Court.
FINALITY OF DECISION
KING INTEGRATED SECURITY SERVICES, INC. vs. GALO S. GATAN

[G.R. No. 143813. July 7, 2003.]
CALLEJO, SR., J.:

FACTS: Galo S. Gatan, respondent, filed with the Labor Arbiter a complaint for illegal deduction
and underpayment of wages against King Integrated Security Services, Inc. and/or Mina
King.Eventually, the Labor Arbiter rendered a decision in favor of Gatan. On appeal, the National
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Labor Relations Commission (NLRC) issued a Resolution modifying the Labor Arbiter's Decision by
deleting the amount representing respondent's wage differential for the period from November 2,
1990 to February 10, 1992, pursuant to Article 291 of the Labor Code which provides that all money
claims arising from employer-employee relations shall be filed within three (3) years from the time
the cause of action accrued, otherwise, they shall be forever barred.
The NLRC Resolution, having become final and executory, the Labor Arbiter issued an order
directing the issuance of a writ of execution. From this order, petitioners interposed an appeal to
the NLRC, but it was dismissed. Their motion for reconsideration was denied. Forthwith,
petitioners filed with the Court of Appeals a petition for certiorari assailing the NLRC Resolution
dismissing their appeal. The Court of Appeals dismissed the petition and affirmed with
modification the Resolutions of the NLRC. Petitioners filed a motion for partial reconsideration but
it was denied for lack of merit.
ISSUE: Whether or not petitioner has the right to appeal.
HELD: The petition lacks merit. We have ruled that an order of execution of a final and executory
judgment is not appealable, otherwise, there would be no end to a case.
In Fabular vs. Court of Appeals, 6 we held: "The judgment in this case had long become
final and had in fact, been executed. It is now beyond the power of the lower court, or of this
Court for that matter, to modify the same. Settled is the rule that after a judgment has become
final, no additions can be made thereto, and nothing can be done therewith except its execution;
otherwise, there would be no end to litigations, thus setting at naught the main role of courts of
justice, which is to assist in the enforcement of the rule of law and the maintenance of peace and
order, by setting justiceable controversies with finality."
WHEN JUDGEMENT HAS BECOME FINAL AND EXECUTORY
SOLIDBANK CORPORATION vs. COURT OF APPEALS and GERARDO A. GARCIA
PUNO, J.:
FACTS: Private respondent Garcia is petitioner’s documentation clerk and signature control, the
highest rank position of a check verifier. Garcia cleared three different Solidbank checks which
turned out to be forgeries. Petitioner found Garcia responsible for clearing the forged checks and
informed him that his employment is being terminated for cause.
Garcia filed a complaint for illegal dismissal before the NLRC Arbitration Branch. He alleged
that he was charged with syndicated forgery and falsification without investigation and hearing,
and the charge was not even established. He added that he was terminated without just cause and
in violation of his right to due process. He prayed for separation pay, backwages, moral damages,
attorney's fees and the cost of suit. Labor Arbiter rendered a decision dismissing Garcia's complaint
for lack of merit. Garcia appealed to the NLRC, which partially granted the appeal, ruling that
Garcia was illegally dismissed but limited the award of backwages to only one year as it found that
he "is not entirely faultless, as there was some sort of neglect on his part on the performance of his
duties."
Petitioner appealed with the Court of Appeals by filing a special civil action for certiorari
but the appellate court decided instead to grant Garcia full backwages.
ISSUE: Whether or not the CA erred when it increased the original award of the NLRC considering
such award was never elevated on appeal or by certiorari by private respondent.
HELD: Yes. The well-settled rule with respect to civil cases is that a party who has not appealed
from a decision cannot seek any relief other than what is provided in the judgment appealed from.
An appellee who has himself not appealed may not obtain from the appellate court any affirmative
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relief other than the ones granted in the decision of the lower court. There are, however,
exceptions to the rule.
The NLRC granted backwages but limited it to a period of one year after it found that
"there was some sort of neglect on his part in the performance of his duties." Given this finding, his
failure to contest the limited award is fatal. It had the effect of an admission that he was not
entirely fault-free in carrying out his duties and that he was accepting the one-year award, and
relinquishing his claim for full backwages, due to such neglect. The ruling therefore of the NLRC
that he was entitled to only a year of backwages due to some neglect became binding and final to
him and can no longer be modified.
EXHAUSTION OF REMEDIES
UNIVERSITY OF IMMACULATE CONCEPCION, ET AL. vs.YOLIBELLE S. AVINANTE, ET AL.

G.R. No. 143557 June 25, 2004
SANDOVAL-GUTIERREZ J.:
FACTS: Avinante, Labor and Employment Officer III sent to the University of Immaculate
Concepcion, a notice requesting the inspection of its payroll, proof of payment to its employees
and a record of its capital and total assets. Upon receipt, petitioner's directress, Sister Maria
Jacinta De Belen, RVM filed a motion seeking to enjoin respondent Avinante from inspecting its
records. Despite petitioners' motion, respondent Avinante proceeded with her inspection. But she
was refused access to petitioners' records, so she issued a "Notice of Inspection Results," specifying
the violations against labor law as well as occupational safety and health standard laws committed
by petitioners. They then filed an opposition to this Notice.
The Regional Director of Regional Office No. XI issued an Order finding petitioners liable for
violation of the above laws and directing them to pay by way of restitution to their 193 employees.
Petitioners filed a motion for reconsideration but was denied by the Regional Director. On appeal,
the Office of the DOLE Secretary with modification the assailed Orders. Petitioners filed a motion
for reconsideration but was denied.
This prompted petitioners to file a petition for certiorari with this Court which we referred
to the Court of Appeals which the Court of Appeals dismissed the petition for being late. Petitioners
filed a motion for reconsideration, however, the same was denied by the Appellate Court.
ISSUE: Whether or not the Court of Appeals erred in dismissing the petition for certiorari for being
late.
HELD: The filing of a petition for certiorari before the Supreme Court (now before the Court of
Appeals pursuant to the ruling in St. Martin's Funeral Home vs. NLRC) shall not stay the execution of
the order or decision unless the aggrieved party secures a temporary restraining order from the
Court within fifteen (15) calendar days from the date of finality of the order or decision or posts a
supersedeas bond in an amount which is adequate to protect the interests of the prevailing party
subject to the approval of the Secretary."
In National Federation of Labor vs. Laguesma, we ruled that "the remedy of an aggrieved
party in a Decision or Resolution of the Secretary of the DOLE is to timely file a motion for
reconsideration as a precondition for any further or subsequent remedy, and then seasonably file a
special civil action for certiorari under Rule 65 of the 1997 Rules of Civil Procedure." Under this
Rule, petitioners should have filed their petition for certiorari within 60 days from receipt of the
DOLE Secretary's Order denying their first motion for reconsideration.
Suffice it to say that even if petitioners' second motion is in order, however, it is a pro
forma motion. As aptly stated by the Court of Appeals, "the second motion for reconsideration filed
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by petitioners was a mere reiteration of the arguments raised in their first motion for
reconsideration and passed upon." In Vda de Espina vs. Abaya, we held that a second motion for
reconsideration, being pro-forma, does not suspend the period to file a petition for certiorari.
Furthermore, the second motion for reconsideration has not stated new grounds.
DUTY TO BARGAIN
GENERAL MILLING CORPORATION vs. COURT OF APPEALS

[G.R. No. 146728. February 11, 2004]
QUISUMBING J.:
FACTS: In its two plants located at Cebu City and Lapu-Lapu City, petitioner General Milling
Corporation (GMC) employed 190 workers. They were all members of private respondent General
Milling Corporation Independent Labor Union (union, for brevity), a duly certified bargaining agent.
GMC and the union concluded a collective bargaining agreement (CBA) which included the issue of
representation effective for a term of three years. The CBA was effective for three years
retroactive to December 1, 1988. Hence, it would expire on November 30, 1991.
On November 29, 1991, a day before the expiration of the CBA, the union sent GMC a
proposed CBA, with a request that a counter-proposal be submitted within ten (10) days. As early
as October 1991, however, GMC had received collective and individual letters from workers who
stated that they had withdrawn from their union membership, on grounds of religious affiliation
and personal differences. On December 16, 1991, GMC wrote a letter to the union’s officers stating
that it felt there was no basis to negotiate with a union which no longer existed.
On January 13, 1992, GMC dismissed Marcia Tumbiga, a union member, on the ground of
incompetence. The union protested and requested GMC to submit the matter to the grievance
procedure provided in the CBA. GMC, however, advised the union to “refer to our letter dated
December 16, 1991.” Thus, the union filed a complaint against GMC with the NLRC, Arbitration
Division, Cebu City. The complaint alleged unfair labor practice on the part of GMC. The labor
arbiter dismissed the case with the recommendation that a petition for certification election be
held to determine if the union still enjoyed the support of the workers. The union appealed to the
NLRC. The NLRC held that respondent union remained as the exclusive bargaining agent with the
right to renegotiate the economic provisions of the CBA. Consequently, it was unfair labor practice
for GMC not to enter into negotiation with the union.
On GMC’s motion for reconsideration, the NLRC set aside its decision. Hence, the union
filed a petition for certiorari before the Court of Appeals. The appellate court rendered a decision
which granted the petition of the union. A motion for reconsideration was seasonably filed by GMC
but the CA denied it for lack of merit.
ISSUES: Whether or not the Court of Appeals acted with grave abuse of discretion amounting to lack
or excess of jurisdiction in (1) finding GMC guilty of unfair labor practice for violating the duty to
bargain collectively and/or interfering with the right of its employees to self-organization, and (2)
imposing upon GMC the draft CBA proposed by the union for two years to begin from the expiration
of the original CBA.
HELD: The law mandates that the representation provision of a CBA should last for five years. The
relation between labor and management should be undisturbed until the last 60 days of the fifth
year. Hence, it is indisputable that when the union requested for a renegotiation of the economic
terms of the CBA on November 29, 1991, it was still the certified collective bargaining agent of the
workers, because it was seeking said renegotiation within five (5) years from the date of effectivity
of the CBA on December 1, 1988. The union’s proposal was also submitted within the prescribed 3-
year period from the date of effectivity of the CBA, albeit just before the last day of said period. It
was obvious that GMC had no valid reason to refuse to negotiate in good faith with the union. For

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refusing to send a counter-proposal to the union and to bargain anew on the economic terms of the
CBA, the company committed an unfair labor practice under Article 248 of the Labor Code.
The duty to bargain collectively means the performance of a mutual obligation to meet and
convene promptly and expeditiously in good faith for the purpose of negotiating an agreement.
Good faith or bad faith is an inference to be drawn from the facts. Both parties are required to
perform their mutual obligation to meet and convene promptly and expeditiously in good faith for
the purpose of negotiating an agreement. The union lived up to this obligation when it presented
proposals for a new CBA to GMC within three (3) years from the effectivity of the original CBA. But
GMC failed in its duty under Article 252. What it did was to devise a flimsy excuse, by questioning
the existence of the union and the status of its membership to prevent any negotiation.
Failing to comply with the mandatory obligation to submit a reply to the union’s proposals,
GMC violated its duty to bargain collectively, making it liable for unfair labor practice. Perforce,
the Court of Appeals did not commit grave abuse of discretion amounting to lack or excess of
jurisdiction in finding that GMC is, under the circumstances, guilty of unfair labor practice.
Finally, did the CA gravely abuse its discretion when it imposed on GMC the draft CBA
proposed by the union for two years commencing from the expiration of the original CBA? The
provision mandates the parties to keep the status quo while they are still in the process of working
out their respective proposal and counter proposal. The general rule is that when a CBA already
exists, its provision shall continue to govern the relationship between the parties, until a new one
is agreed upon. The rule necessarily presupposes that all other things are equal. That is, that
neither party is guilty of bad faith. However, when one of the parties abuses this grace period by
purposely delaying the bargaining process, a departure from the general rule is warranted. Since it
was GMC which violated the duty to bargain collectively, it had lost its statutory right to negotiate
or renegotiate the terms and conditions of the draft CBA proposed by the union.
SURFACE BARGAINING; BLUE-SKY BARGAINING
STANDARD CHARTERED BANK EMPLOYEES UNION vs.MA. NIEVES R. CONFESOR, ET AL.

G.R. No. 114974 June 16, 2004
CALLEJO, SR., J.:

FACTS: Standard Chartered Bank is a foreign banking corporation doing business in the Philippines.
The exclusive bargaining agent of the rank and file employees of the Bank is the Standard
Chartered Bank Employees Union.
The Bank and the Union signed a five-year collective bargaining agreement (CBA) with a
provision to renegotiate the terms thereof on the third year. Prior to the expiration of the three-
year period but within the sixty-day freedom period, the Union initiated the negotiations. The Bank
took note of the Union’s proposals. The Bank attached its counter-proposal to the non-economic
provisions proposed by the Union. Before the commencement of the negotiation, the Union
suggested that the bank lawyers should be excluded from the negotiating team. The Bank acceded.
Meanwhile, the Bank suggested that Umali, the President of the National Union of Bank Employees
(NUBE), be excluded from the Union’s negotiating panel. However, Umali was retained as a
member thereof.
The parties met and set the ground rules for the negotiation. Both parties agreed to place
the notation “DEFERRED/DEADLOCKED on items that remained unresolved.” Diokno stated that, in
order for the Bank to make a better offer, the Union should clearly identify what it wanted to be
included in the total economic package. Umali replied that it was impossible to do so because the
Bank’s counter-proposal was unacceptable. The Union declared a deadlock and filed a Notice of
Strike before the National Conciliation and Mediation Board (NCMB).

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On the other hand, the Bank filed a complaint for Unfair Labor Practice (ULP) and Damages
before the Arbitration Branch of the National Labor Relations Commission (NLRC) in Manila. The
Bank alleged that the Union violated its duty to bargain, as it did not bargain in good faith. It
contended that the Union demanded “sky high economic demands,” indicative of blue-sky
bargaining.
The complaint for ULP filed by the Bank before the NLRC was consolidated with the
complaint over which the SOLE assumed jurisdiction. After the parties submitted their respective
position papers, the SOLE dismissed the charges of ULP of both the Union and the Bank, explaining
that both parties failed to substantiate their claims. Dissatisfied, the Union filed a motion for
reconsideration with clarification, while the Bank filed a motion for reconsideration. The SOLE
issued a Resolution denying the motions. The Union filed a second motion for reconsideration,
which was, likewise, denied.
The Bank and the Union signed the CBA. Immediately thereafter, the wage increase was
effected and the signing bonuses based on the increased wage were distributed to the employees
covered by the CBA. The Office of the Solicitor General, in representation of the public
respondent, prayed that the petition be dismissed. It asserted that the Union failed to prove its
ULP charges and that the public respondent did not commit any grave abuse of discretion in issuing
the assailed order and resolutions.
ISSUES:
1. Whether or not the Bank is guilty of “interference” with its choice of negotiator;
surface bargaining; making bad faith non-economic proposals; and refusal to furnish
the Union with copies of the relevant data;
2. Whether or not the public respondent acted with grave abuse of discretion amounting
to lack or excess of jurisdiction when she issued the assailed order and resolutions;
and,
3. Whether or not the petitioner is estopped from filing the instant action.
HELD:
The petition is bereft of merit.
(1) Article 248(a) of the Labor Code, considers it an unfair labor practice when an employer
interferes, restrains or coerces employees in the exercise of their right to self-organization or the
right to form association. The right to self-organization necessarily includes the right to collective
bargaining.
Parenthetically, if an employer interferes in the selection of its negotiators or coerces the

Union to exclude from its panel of negotiators a representative of the Union, and if it can be
inferred that the employer adopted the said act to yield adverse effects on the free exercise to
right to self-organization or on the right to collective bargaining of the employees, ULP under
Article 248(a) in connection with Article 243 of the Labor Code is committed.
In order to show that the employer committed ULP under the Labor Code, substantial
evidence is required to support the claim. Substantial evidence has been defined as such relevant
evidence as a reasonable mind might accept as adequate to support a conclusion. In the case at
bar, the Union bases its claim of interference on the alleged suggestions of Diokno to exclude Umali
from the Union’s negotiating panel. The complaint was made only after a deadlock was declared
by the Union. It is clear that such ULP charge was merely an afterthought.
The Duty to Bargain Collectively

Surface bargaining is defined as “going through the motions of negotiating” without any
legal intent to reach an agreement. The minutes of meetings do not show that the Bank had any
intention of violating its duty to bargain with the Union. The Union has not been able to show that
the Bank had done acts, both at and away from the bargaining table, which tend to show that it did
not want to reach an agreement with the Union or to settle the differences between it and the
Union. Admittedly, the parties were not able to agree and reached a deadlock. However, it is
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herein emphasized that the duty to bargain “does not compel either party to agree to a proposal or
require the making of a concession.” Hence, the parties’ failure to agree did not amount to ULP
under Article 248(g) for violation of the duty to bargain. The records show that the Bank’s
counterproposals on the non-economic provisions or political provisions did not put “up for grabs”
the entire work of the Union and its predecessors. We, likewise, find that the Union failed to
substantiate its claim that the Bank refused to furnish the information it needed. The Union, did
not, as the Labor Code requires, send a written request for the issuance of a copy of the data about
the Bank’s rank and file employees. Moreover, as alleged by the Union, the fact that the Bank
made use of the aforesaid guestimates, amounts to a validation of the data it had used in its
presentation.
(2) No Grave Abuse of Discretion On the Part of the Public Respondent

While it is true that a showing of prejudice to public interest is not a requisite for ULP
charges to prosper, it cannot be said that the public respondent acted in capricious and whimsical
exercise of judgment, equivalent to lack of jurisdiction or excess thereof. Neither was it shown
that the public respondent exercised its power in an arbitrary and despotic manner by reason of
passion or personal hostility.
(3) Estoppel not Applicable

The respondent Bank argues that the petitioner is estopped from raising the issue of ULP
when it signed the new CBA.
In the case, however, the approval of the CBA and the release of signing bonus do not
necessarily mean that the Union waived its ULP claim against the Bank during the past negotiations.
After all, the conclusion of the CBA was included in the order of the SOLE, while the signing bonus
was included in the CBA itself. Moreover, the Union twice filed a motion for reconsideration
respecting its ULP charges against the Bank before the SOLE.
The Union Did Not Engage In Blue-Sky Bargaining

We, likewise, do not agree that the Union is guilty of ULP for engaging in blue-sky
bargaining or making exaggerated or unreasonable proposals. The Bank failed to show that the
economic demands made by the Union were exaggerated or unreasonable. The minutes of the
meeting show that the Union based its economic proposals on data of rank and file employees and
the prevailing economic benefits received by bank employees from other foreign banks doing
business in the Philippines and other branches of the Bank in the Asian region.
In sum, we find that the public respondent did not act with grave abuse of discretion
amounting to lack or excess of jurisdiction when it issued the questioned order and resolutions.
While the approval of the CBA and the release of the signing bonus did not estop the Union from
pursuing its claims of ULP against the Bank, we find the latter did not engage in ULP. We, likewise,
hold that the Union is not guilty of ULP.
CBA; SIGNING BONUS
PHILACOR vs. COURT OF APPEALS, ET AL.

[G.R. No. 149434. June 3, 2004.]
FACTS: Petitioner is a domestic corporation where respondent United Philacor Workers Union-
NAFLU is the duly elected collective bargaining representative of the rank-and-file employees of
petitioner. During the collective bargaining negotiations between petitioner and respondent union,
petitioner offered P4,000.00 to each employee as an "early conclusion bonus." Upon conclusion of
the CBA negotiations, petitioner accordingly gave this early signing bonus. Respondent union sent
notice to petitioner of its desire to negotiate a new CBA. Petitioner and respondent union began
their negotiations. But a deadlock was declared.
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On a conciliation and mediation conference before Conciliator Velasco, there were

eighteen unresolved items between petitioner and respondent union. The parties agreed on
fourteen items, leaving wages, rice subsidy, signing, and retroactive bonus unresolved. A strike was
staged and lasted for eleven days and resulted in the stoppage of manufacturing operations as well
as losses for petitioner. Labor Secretary Bienvenido Laguesma assumed jurisdiction over the dispute
and issued a return to work order. Secretary Laguesma further issued that the signing bonus should
be given as part of the incentive and benefits. Petitioner filed a Partial Motion for Reconsideration
stating that while it accepted the decision of Secretary Laguesma, it took exception to the award
of the signing bonus. Sec. Laguesma denied petitioner's motion. A Petition for Certiorari with the
Court of Appeals was dismissed. The award of the signing bonus was affirmed. Petitioner filed a
Motion for Reconsideration but the same was denied.
ISSUE: Whether or not, the signing bonus should be included as a part of the incentives although no
CBA was renewed by the parties.
HELD: The petition is meritorious. Petitioner invokes the doctrine laid down in the case of Caltex v.
Brillantes, where it was held that the award of the signing bonus by the Secretary of Labor was
erroneous. The said case involved similar facts and circumstances. However, as clearly explained by
Caltex, a signing bonus may not be demanded as a matter of right. If it is not agreed upon by the
parties or unilaterally offered as an additional incentive by Caltex, the condition for awarding it
must be duly satisfied. In the present case, the condition sine qua non for its grant — a non-strike —
was not complied with.
In the case at bar, two things militate against the grant of the signing bonus: first, the non-
fulfillment of the condition for which it was offered, i.e., the speedy and amicable conclusion of
the CBA negotiations; and second, the failure of respondent union to prove that the grant of the
said bonus is a long established tradition or a "regular practice" on the part of petitioner. Petitioner
admits, and respondent union does not dispute, that it offered an "early conclusion bonus" or an
incentive for a swift finish to the CBA negotiations. Verily, a signing bonus is justified by and is the
consideration paid for the goodwill that existed in the negotiations that culminated in the signing
of a CBA.
Furthermore, we have consistently ruled that a bonus is not a demandable and enforceable
obligation. True, it may nevertheless be granted on equitable considerations as when the giving of
such bonus has been the company's long and regular practice. To be considered a "regular
practice," however, the giving of the bonus should have been done over a long period of time, and
must be shown to have been consistent and deliberate. The test or rationale of this rule on long
practice requires an indubitable showing that the employer agreed to continue giving the benefits
knowing fully well that said employees are not covered by the law requiring payment thereof.
INTERPRETATION OF THE CBA
MINDANAO STEEL CORPORATION vs. MINSTEEL FREE WORKERS ORGANIZATION (MINFREWO-NFL)

[G.R. No. 130693. March 4, 2004]
FACTS: Mindanao Steel Corporation and Minsteel Free Workers Organization MINFREWO-NFL
Cagayan de Oro City executed a collective bargaining agreement (CBA) providing for an increase of
P20.00 in the workers’ daily wage. Petitioner refused to implement the Interim Wage Order No.
RX-02, prompting respondent to file with the National Mediation and Conciliation Board (NCMB) a
complaint for payment of ECOLA against the former. Then the parties, in a Submission Agreement
agreed to submit the case for voluntary arbitration. After the parties had submitted their position
papers and other pleadings, the Voluntary Arbitrator rendered a decision ordering petitioner to pay
respondent’s members and other workers their ECOLA. Petitioner then filed a motion for
reconsideration but was denied.
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Thereafter, petitioner filed with the Court of Appeals a petition for certiorari with prayer
for issuance of a temporary restraining order and/or writ of preliminary injunction. The Appellate
Court promulgated its Decision affirming the Voluntary Arbitrator’s Decision The Court of Appeals
issued a Resolution denying petitioner’s motion for reconsideration. Hence, this petition for review
on certiorari.
ISSUE: Whether or not petitioner is exempt from paying the ECOLA in light of the CBA entered into
by the parties.
HELD: Petitioner’s contentions lack merit.
To begin with, any doubt or ambiguity in the contract between management and the union
members should be resolved in the light of Article 1702 of the Civil Code which provides: “(I)n case
of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and
decent living for the laborer.”
Pertinent is Section 3, Article VII of the CBA which provides: “It is hereby agreed that
these salary increases shall be exclusive of any wage increase that may be provided by law as a
result of any economic change.” The provision is clear that the salary increases, such as the P20.00
provided under the CBA, shall not include any wage increase that may be provided by law as a
result of any economic change. Hence, aside from the P20.00 CBA wage increase, respondent’s
members are also entitled to the ECOLA under the Interim Wage Order. The CBA provision under
Section 3, Article VII needs no interpretation. Contracts which are not ambiguous are to be
interpreted according to their literal meaning and not beyond their obvious intendment.
Finally, the P20.00 daily wage increase granted by petitioner to its employees under the
CBA can not be considered as creditable benefit or compliance with the Interim Wage Order
because such was intended as a CBA or negotiated wage increase and not “because of, or in
anticipation of the fuel price hikes.”
Note:
Category for Establishment Amount of ECOLA
1. With not more than 20 employees P200 / month
2. With 21 but not more than 150 employees P300 / month
3. With 151 but not more than 300 employees P400 / month
4. With more than 300 employees P500 / month
ART. 218 JURISDICTION OF THE SECRETARY OF LABOR
SMC QUARRY 2 WORKERS UNION — FEBRUARY SIX MOVEMENT vs.

TITAN MEGABAGS INDUSTRIAL CORP.
G.R. No. 150761 May 19, 2004
FACTS: The controversy at bar arose from a petition for certification election filed with the Med-
Arbitration Section, Regional Office No. IV, Department of Labor and Employment (DOLE) at
Calamba, Laguna by petitioner SMC Quarry 2 Workers Union-February Six Movement (FSM) Local
Chapter. In its petition for certification election, petitioner alleged that it is a legitimate labor
organization that seeks to represent the regular rank-and-file workers at Titan Megabags Industrial
Corporation, respondent.
Respondent opposed the petition, contending that members of petitioner union are not its
employees but of Stitchers Multi-Purpose Cooperative (SMC), an independent contractor. The Med-
Arbiter held that respondent is the employer of the members of petitioner union and directed that
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a certification election be conducted by its regular rank and file workers. On appeal, the Office of
the DOLE Secretary, affirmed in toto the Med-Arbiter’s Order authorizing a certification election.
A motion for reconsideration was denied by the Office of the DOLE Secretary in a Resolution as it
was late by seven (7) days. Respondent filed a petition for certiorari with the Court of Appeals,
alleging that the Office of the DOLE Secretary committed grave abuse of discretion in its decision
and in ordering a certification election. The Court of Appeals set aside the resolutions of the Office
of the DOLE Secretary and disallowed the conduct of a certification election. The Court of Appeals
denied petitioner’s motion for reconsideration.
ISSUES:
1. Whether or not, the CA erred in setting aside the final and executory Resolutions of the
Dole Secretary;
2. Whether or not, the employer has the locus standi to question the certification election
of its employees.
HELD:
(1) Under Article 259 of the Labor Code, as amended, any party to a certification election
may appeal the order of the Med-Arbiter directly to the Secretary of Labor who shall decide the
same within fifteen (15) calendar days. Along this line, Section 15, Rule XI, Book V of the Omnibus
Rules Implementing the Labor Code provides that the Decision or Resolution of the Secretary of the
DOLE on appeal shall be final and executory. Upon finality of the Decision of the Secretary, the
entire records of the case shall be remanded to the office of origin for implementation of the
Decision, unless restrained by the appropriate court.
In National Federation of Labor vs. Laguesma, we ruled that the remedy of an aggrieved
party in a Decision or Resolution of the Secretary of the DOLE is to timely file a motion for
reconsideration as a precondition for any further or subsequent remedy, and then seasonably file a
special civil action for certiorari under Rule 65 of the 1997 Rules of Civil Procedure. And without a
motion for reconsideration seasonably filed within the ten-day reglementary period, the questioned
Decision or Resolution of the Secretary becomes final and executory. Consequently, the merits of
the case can no longer be reviewed to determine if the Secretary could be faulted for grave abuse
of discretion. Respondent’s failure to file its motion for reconsideration seasonably is jurisdictional
and fatal to its cause and has, in effect, rendered final and executory the resolutions of the
Secretary of the DOLE.
(2) Even if there was no procedural flaw on the part of respondent, still the Appellate
Court should have denied respondent’s petition for certiorari. We have held that "in certification
elections, the employer is a bystander, it has no right or material interest to assail the certification
election." Thus, when a petition for certification election is filed by a legitimate labor organization,
it is good policy of the employer not to have any participation or partisan interest in the choice of
the bargaining representative. While employers may rightfully be notified or informed of petitions
of such nature, they should not, however, be considered parties thereto with an inalienable right to
oppose it.
JURISDICTION OF THE MED-ARBITER AND THE SECRETARY OF LABOR
TOYOTA MOTOR PHILS. CORPORATION WORKERS' ASSOCIATION vs. COURT OF APPEALS

[G.R. No. 148924. September 24, 2003.]
CALLEJO, SR., J.:

FACTS: This Court ruled that the employees of the respondent Toyota Motor Philippines
Corporation (TMPC) belonging to the Level 5 positions under its Single Salary Structure set up were
supervisory employees. The decision became final and executory. Thereafter, the respondent put
up and implemented its Three-Function Salary Structure for its personnel/employees.

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Petitioner Toyota Motor Philippines Corporation Workers' Association (TMPCWA) filed a
petition for certification election in an unorganized establishment, particularly for the rank-and-
file employees before the Med-Arbitration Unit of DOLE-NCR. The respondent TMPC opposed the
petition on the ground that a case was pending before the Supreme Court between it and another
union, the Toyota Motor Philippines Corporation Labor Union (TMPCLU), whose registration
certificate has been cancelled. It asserted that the petitioner's membership is the same as that of
the TMPCLU, which sought to represent the same bargaining unit. Med-Arbiter Lameyra resolved to
dismiss the petition. On appeal, the DOLE rendered a Decision reversing the Med-Arbiter's decision,
and ordering the conduct of a certification election. The DOLE denied the respondent's motion for
reconsideration of the said decision.
The respondent submitted a list of 1,110 employees however the petitioner, questioned the
eligibility of the 120 employees in the list. Nonetheless, the certification election proceeded as
scheduled. During the certification election, 105 out of the 120 employees whose eligibilities
had been questioned by the petitioner were able to cast their votes, but these votes were not
opened and considered. With 503 affirmative votes and the exclusion of the 105 challenged
votes, the, petitioner asserted that it garnered the majority votes of the 943 votes cast (less
the challenged votes); hence, it sought to be declared as the certified bargaining agent of the
respondent at its Sta. Rosa and Bicutan Plants. Respondent filed its position paper, alleging
that the 105 challenged votes should have been opened and considered in the tabulation of the
results of the election. The respondent further alleged that under the Three-Function Salary
Structure of its personnel the following were rank-and-file employees:
Med-Arbiter Zosima Lameyra issued an Order certifying the petitioner as the exclusive
bargaining agent of the rank-and-file employees of Toyota in the said plants. She held that the
challenged voters were supervisory employees under the Three-Function Salary Structure. TMPCWA
is hereby certified as the bargaining agent of the rank-and-file employees of the company.
The respondent interposed an appeal from the said order before the DOLE. The respondent
asserted that the challenged voters were rank-and-file employees. Labor Arbiter ruled that the
Constitution mandates that the State shall accord protection to labor. And that petitioners may
exercise all their rights and claim all legal benefits as rank-and-file workers, as found in the
Constitution and the Labor Code. The DOLE affirmed the order of Med-Arbiter. The petitioner
voted to stage a strike at the Sta. Rosa and Bicutan Plants of the respondent and filed a
manifestation with the NCR-National Conciliation and Mediation Board (NCR-NCMB) informing the
latter of its intention to stage a strike.
The petitioner filed a manifestation with the NCR-NCMB that the respondent had dismissed
three hundred union members and officers. Nevertheless, the petitioner gave several days for the
respondent to "mend" its mind and to cease and desist from committing unfair labor practice. The
petitioner further stated that the union members would stage a protest in front of the company
premises. DOLE, thru Secretary Patricia Sto. Tomas, issued a resolution denying with modification
the motion for reconsideration of the respondent.
ISSUES:
1. Whether or not Med-Arbiter and the Office of the Secretary has jurisdiction in
certification election proceedings;
2. Whether or not public respondent Secretary gravely abused her discretion, amounting
to lack or excess of jurisdiction, in declaring that the challenged voters, except for the
18, are supervisory employees, and thus ineligible to vote in the certification election
among the company’s rank-and-file employees;
3. Whether or not the respondent is entitled to injunctive relief.
HELD:
(1) Indeed, it is within the exclusive jurisdiction of the Med-Arbiter and the Office of the
Secretary in certification election proceedings to resolve this issue. When this case was filed, the
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Med-Arbiter and later on the Office of the Secretary acquired jurisdiction over the subject matter
of the case and the parties to it, to the exclusion of all other adjudicating agencies. In so acquiring
jurisdiction, the Med-Arbiter and later on this Office had jurisdiction to resolve the principal issue
on the status of the workers whose rights, so the Labor Arbiter surmised, "may be rendered inutile
if their status is unresolved."
(2) Specifically, the respondent asserted that the petitioner bears the burden of proving
that the 105 challenged voters are supervisory employees. Assuming arguendo that the respondent
had the burden, nevertheless, it adduced overwhelming evidence that the challenged voters are,
indeed, rank-and-file employees. Proceedings before labor agencies merely require the parties to
submit their respective position papers and supporting affidavits. Hence, the challenged voters is
admissible in evidence. The public respondent SOLE cannot consider the affidavits of the
challenged voters as defective by concluding that the same were not properly notarized, inasmuch
as the petitioners never challenged the matter before the Med-Arbiter below. All the affidavits of
the challenged employees are admissible in evidence and entitled to credence.
(3) There was no longer any emergency, urgency or a pressing necessity for the CA to still
issue a writ of preliminary injunction. There is no showing in the record that despite the
assumption by the SOLE of the dispute between the petitioner and the respondent, the petitioner is
bent on staging a strike against the respondent in defiance by the petitioner of the order of the
SOLE. This issue is interwoven with the principal issue on the merits of the petition, whether or not
the respondent is the real party-in-interest to assail the resolution of the SOLE and the resolution
of the Med-Arbiter. If not elected by the majority of the rank-and-file employees of the
respondent, the petitioner has no legal right to negotiate and bargain with the respondent for a
collective bargaining agreement. By granting the respondent's plea for a writ of preliminary
injunction, the CA, in effect, ruled that the respondent is the real party-in-interest, and not merely
a bystander in the certification election; hence, has a material and substantial right sought to be
protected. Thus, through the issuance of the writ, the CA in effect had prejudged the principal
issue before it. The CA took into account the pleadings of the parties and their admissions during
the hearing of respondent's plea for injunctive relief. The respondent prayed the CA for a writ of
preliminary injunction on its claim. The SOLE had determined that the industry engaged in by the
respondent is indispensable to the national interest. The petitioner assured the CA and the
respondent that in view hereof; its members and officers would no longer stage a strike because of
the certification election. The Writ of Preliminary Injunction is NULLIFIED.
ART. 263; STRIKE AND LOCKOUT
GRAND BOULEVARD HOTEL vs. GENUINE LABOR ORGANIZATION

OF WORKERS IN HOTEL, RESTAURANT AND ALLIED INDUSTRIES
[G.R. No. 153664. July 18, 2003.]
CALLEJO, SR., J.:

FACTS: Petitioner and respondent union entered into and signed a CBA covering the period of July
10, 1988 to July 9, 1991. On September 27, 1990, the respondent union filed a notice of strike
based on the following grounds: a) Violation of CBA; b) Coercion of employees; c) Harassment; d)
Arbitrary transfer of employees; and e) Illegal termination and suspension of employees. On
October 16, 1990, the petitioner's general manager, wrote the Acting Secretary of Labor and
Employment (SOLE for brevity) informing him of the petitioner's decision to retrench 171 employees
on a staggered basis, spread over a period of 60 days, to lessen the daily financial losses being
incurred by the petitioner. The next day, the respondent union informed the DOLE-NCR that the
union will conduct a strike vote referendum. The members of the respondent union voted to stage
a strike. DOLE-NCR was thereafter informed of the results of the strike vote referendum. On
October 31, 1990, the SOLE issued a status quo ante bellum order certifying the case to the NLRC
for compulsory arbitration and enjoining the parties from engaging in any strike or lockout.

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The petitioner wrote the SOLE of its decision to implement its retrenchment program to
stem its huge losses. Subsequently, the petitioner terminated the employment of 148 employees.
The remaining employees were also informed that it will close in six months. The respondent union
protested the actions of the petitioner invoking Section 15, Article VI of the CBA. By way of riposte,
the respondent union filed on November 16, 1990 another notice of strike because of what it
perceived as the petitioner's continuing unfair labor practices (ULP). On the same day, the officers
of the respondent union and some members staged a picket in the premises of the hotel,
obstructing the free ingress and egress thereto. The following day, petitioner terminated the
employment of the officers and members of the respondent union. On November 28, 1990, the
SOLE issued an order certifying the labor dispute to the NLRC. The SOLE issued a return-to-work
order, which the respondent officers and members complied.
Petitioner however filed a complaint with the Regional Arbitration Office of the NLRC for
illegal strike against the respondents on the ground that the latter failed to comply with the
requirements provided under Arts. 263 and 264 of the Labor Code. In their answer, the respondents
alleged that the petitioner committed ULP prior to the filing of the November 16, 1990 notice of
strike. Hence, there was no need for the respondent union to comply with Arts. 263 and 264 of the
Labor Code, as the notice filed by the union on September 27, 1990 was sufficient compliance with
the law.
After due trial, the Labor Arbiter rendered a decision in favor of the petitioner and
declared the union officers to have lost and forfeited their employment. When the petitioner
learned of said decision, it forthwith barred the officers and members of the respondent union from
entering the hotel. The respondent union appealed the decision to the NLRC, alleging that it had
complied with the requirements laid down in Arts. 263 and 264 of the Labor Code because its
November 16, 1990 notice of strike was a mere reiteration of its September 27, 1990 notice of
strike, which, in turn, complied with all the requirements of the aforementioned articles, i.e., the
cooling-off period, the strike ban, the strike vote and the strike vote report. After trial, the NLRC
affirmed the decision of the LA. It ratiocinated that the compliance by respondents of the
requirements laid down in Arts. 263 and 264 of the Labor Code respecting the September 27, 1990
notice of strike filed by the union cannot be carried over to the November 16, 1990 notice of strike.
Resultantly, for failure of the union to comply with the aforementioned requirements for its
November 16, 1990 notice of strike, the strike staged on November 16 up to November 29, 1990
was illegal. Thereafter, the respondents appealed NLRC’s decision to the CA and the latter ruled
that the strike was legal, hence, the dismissal of respondents were unjustified and without legal
basis. Hence, this petition.
ISSUE: Whether or not the strike staged by the respondent union on November 16 was legal.
HELD: NO. The requisites for a valid strike are as follows: (a) a notice of strike filed with the DOLE
thirty days before the intended date thereof or fifteen days in case of ULP; (b) strike vote approved
by a majority of the total union membership in the bargaining unit concerned obtained by secret
ballot in a meeting called for that purpose; and (c) notice given to the DOLE of the results of the
voting at least seven days before the intended strike. The requisite seven-day period is intended to
give the DOLE an opportunity to verify whether the projected strike really carries the approval of
the majority of the union members. The notice of strike and the cooling-off period were intended
to provide an opportunity for mediation and conciliation. The requirements are mandatory and
failure of a union to comply therewith renders the strike illegal. A strike simultaneously with or
immediately after a notice of strike will render the requisite periods nugatory. Moreover, a strike
that is undertaken, despite the issuance by the SOLE of an assumption or certification order,
becomes a prohibited activity and, thus, illegal pursuant to Art. 264 of the Labor Code, as
amended. Consequently, the union officers and members are deemed to have lost their
employment status for having knowingly participated in an illegal act.
In this case, the respondent union filed its notice of strike with the DOLE on November 16,
1990 and on the same day, staged a picket on the premises of the hotel, in violation of the law.
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The respondents cannot argue that since the notice of strike on November 16, 1990 were for the
same grounds as those contained in their notice of strike on September 27, 1990 which complied
with the requirements of the law on the cooling-off period, strike ban, strike vote and strike vote
report, the strike staged by them on November 16, 1990 was lawful. The matters contained in the
notice of strike of September 27, 1990 had already been taken cognizance of by the SOLE when he
issued on October 31, 1990 a status quo ante bellum order enjoining the respondent union from
intending or staging a strike. Despite the SOLE order, the respondent union nevertheless staged a
strike on November 16, 1990 simultaneously with its notice of strike, thus violating Art. 264(a) of
the Labor Code, as amended, which provides that “ x x x No strike or lockout shall be declared
after assumption of jurisdiction by the President or the Secretary or after certification or
submission of the dispute to compulsory or voluntary arbitration or during the pendency of cases
involving the same grounds for the strike or lockout.”
While it may be true that the petitioner itself barred the officers of the respondent union
from working and sent out circulars of its decision to retrench its employees effective December
16, 1990, the same were not valid justifications for the respondents to do away with the statutory
procedural requirements for a lawful strike. There was no immediate and imperative need for the
respondents to stage a strike on the very day that the notice of strike on November 16, 1990 was
filed because the retrenchment envisaged by the petitioner had yet to take effect on December 14,
1990. The grievances of the respondent union could still very well be ordered and acted upon by
the SOLE before December 14, 1990. The respondents' claim of good faith is not a valid excuse to
dispense with the procedural steps for a lawful strike. Thus, even if the union acted in good faith in
the belief that the company was committing an unfair labor practice, if no notice of strike and a
strike vote were conducted, the said strike is illegal. Hence, the need for a union to adhere to and
comply strictly with the procedural conditions sine qua non provided for by the law in staging a
strike.
CONSEQUENCES OF AN ILLEGAL STRIKE
ELIZABETH C. BASCON vs. COURT OF APPEALS

[G.R. No. 144899. February 5, 2004]
QUISUMBING, J.:
FACTS: The petitioners were employees of private respondent Metro Cebu Community Hospital,
Inc. (MCCH) and members of the Nagkahiusang Mamumuo sa Metro Cebu Community Hospital
(NAMA-MCCH), a labor union of MCCH employees. Petitioner Bascon had been employed as a nurse.
The other petitioner, Cole, had been working as a nursing aide. Both petitioners were dismissed by
the respondent hospital for allegedly participating in an illegal strike.
An intra-union conflict arose between the NAMA-MCCH and the National Labor Federation
(NFL), the mother federation of NAMA-MCCH. NAMA-MCCH asked MCCH to renew their CBA, which
was to expire on December 31, 1995. NFL opposed this move by its local affiliate. MCCH deferred
the CBA negotiations until there was a determination as to which of said unions had the right to
negotiate a new CBA. The members and officers of NAMA-MCCH staged a series of mass actions
inside MCCH’s premises starting February 27, 1996. They marched around the hospital putting up
streamers, placards and posters. MCCH ordered petitioners to desist from participating in the mass
actions conducted in the hospital premises with a warning that non-compliance therewith would
result in the imposition of disciplinary measures. Petitioners again claimed they did not receive said
order. Petitioners Bascon and Cole were then served notices terminating their employment.
Bascon and Cole filed a complaint for illegal dismissal. They denied having participated in
said mass actions or having received the notices. They admit, however, to wearing armbands for
union identity while nursing patients as per instruction of their union leaders. The Labor Arbiter
found the termination to be valid and legal, and dismissed the complaint. On appeal, NLRC
reversed the ruling of the Labor Arbiter and ordered the reinstatement of petitioners with full

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backwages. A motion for reconsideration was filed, where the NLRC reverse itself. Hence, the
instant case.
ISSUES:
1. Whether or not, the CA can supplant its finding of facts with that of the
commission?
2. Whether or not, an employee should be terminated for participating in an illegal
strike?
HELD:
(1) Yes, as a general rule, the findings of facts of the NLRC are deemed binding and
conclusive upon the Court. The CA is not a trier of facts. Thus, resort to judicial review of the
decisions of the NLRC in a special civil action for certiorari under Rule 65 of the Rules of Court is
generally limited to the question of grave abuse of discretion amounting to lack or excess of
jurisdiction. However, where, as in the instant case, the findings of facts of the NLRC contradict
those of the Labor Arbiter, a departure from the general rule is warranted. Thus, the Court may
look into the records of the case and reexamine the questioned findings. Where the NLRC and the
Labor Arbiter disagree on their finding of facts, the Court can review the records to determine
which findings should be preferred as more conformable to the evidentiary facts.
In St. Martin Funeral Home v. NLRC, we held that the special civil action of certiorari is the
mode of judicial review of the decisions of the NLRC either by this Court or the Court of Appeals,
but the latter court is the more appropriate forum in strict observance of the doctrine on the
hierarchy of courts and that, in the exercise of this power, the Court of Appeals can review the
factual findings or the legal conclusions of the NLRC.
(2) In Article 264 (a) of the Labor Code it could be gleaned that while a union officer can
be terminated for mere participation in an illegal strike, an ordinary striking employee, like
petitioners herein, must have participated in the commission of illegal acts during the strike. There
must be proof that they committed illegal acts during the strike. Substantial evidence, which may
justify the imposition of the penalty of dismissal, may suffice.
In this case, the Court of Appeals found that petitioners’ actual participation in the illegal
strike was limited to wearing armbands and putting up placards. There was no finding that the
armbands or the placards contained offensive words or symbols. Thus, neither such wearing of
armbands nor said putting up of placards can be construed as an illegal act. In fact, per se, they
are within the mantle of constitutional protection under freedom of speech.
We cannot in our conscience allow MCCH to unjustly deny petitioners their lawful
occupation, especially at this late point in their lives when it would be a near impossibility for them
to find another employment. The employer’s power to dismiss must be tempered with the
employee’s right to security of tenure.
ILLEGAL STRIKE
MA. COUNSELO MAQUILING, SAN JUAN DE DIOS EDUCATIONAL FOUNDATION EMPLOYEES UNION-
ALLIANCE OF FILIPINO WORKERS et.al. vs. SAN JUAN DE DIOS EDUCATIONAL FOUNDATION, INC.
(HOSPITAL) and NATIONAL LABOR RELATIONS COMMISSION
[G.R. No. 143341. May 28, 2004.]
CALLEJO, SR., J.:

FACTS:
San Juan de Dios Educational Foundation, Inc. is a domestic foundation operating as a
college and hospital with a 200 bed capacity, complemented by 400 hospital personnel, more or
less. San Juan de Dios Educational Foundation Employees Union-Alliance of Filipino Workers, is the
sole and exclusive bargaining representative of the rank-and-file employees in the Foundation.
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Rodolfo Calucin, Jr., then Executive Secretary of the Union, had been employed at the
Foundation as a medical clerk for almost twelve years. The Foundation, through its Personnel
Officer Doringo, informed him that, per its records, he had incurred tardiness and that such
tardiness had affected his efficiency. He was required to explain, in writing, why his services should
not be terminated for gross and habitual neglect of his duties. Calucin, Jr. claimed that he had
already served the maximum suspension of one week for his past tardiness. He furthered that he
had not incurred tardiness for the past four months. Moreover, his superior had given him a
performance rating of FAIR. The Foundation wrote Calucin, Jr. informing the latter that his
employment had been terminated for gross and habitual neglect of duties under Article 282 (b) of
the Labor Code.
Calucin, Jr. filed a Complaint for Illegal Dismissal before the National Arbitration Branch.
On the same date, the Union filed a Notice of Strike before the National Conciliation and Mediation
Board. Then DOLE Secretary certifying the case to the NLRC, directing the striking employees to go
to work, and directing the Foundation to accept all employees under the same terms and conditions
prevailing before the strike. Nevertheless, the officers and striking members of the Union defied
the order of the DOLE and continued with their strike. In the meantime, the Foundation filed a
petition before the NCMB to declare the strike illegal. The Foundation and the Union entered into
an agreement submitting to a voluntary arbitrator their differences.
The Union informed the Foundation that the night-shift duty would be reporting back to
work and the other shift will report on a later date. The Foundation denied the Union's request.
The SOLE issued an Order directing the Foundation to comply with her directives. The Foundation
filed a petition with this Court assailing the order of the SOLE. In the meantime, the Foundation
allowed the payroll reinstatement of the twenty-seven (27) employees subject to the outcome of
its petition filed with this Court. The Union agreed with this arrangement. The Court ruling that the
SOLE did not act with grave abuse of discretion and affirmed her order. The Court denied the said
motion. Nevertheless, the Foundation refused to give the twenty-seven employees the equivalent
of their salaries for the period they were refused reinstatement. This prompted the employees,
through the Union, to file a complaint against the Foundation before the NLRC. The Commission
held that the strike staged by the Union at its inception, legal and peaceful. However, the striking
employees' defiance of the RTWO of the SOLE rendered the strike illegal. The NLRC dismissed the
claim of unfair labor practice arising from the illegal dismissal of Rogelio Calucin, Jr. The Union
filed a motion for reconsideration from the said decision. The NLRC denied the motion.
Dissatisfied with the decision and resolution of the NLRC, the Union and its officers filed a
petition for certiorari before the Court of Appeals. The Court of Appeals issued a Resolution
directing the respondents to file their Comment on the Petition. In the meantime, the Foundation
and the Union executed a new CBA. Among the conditions for its approval was that the termination
of the Union officers as adjudged by the NLRC would not be enforced. However, the Foundation
reneged on this agreement and terminated the services of the Union officers immediately after the
new CBA was signed and approved. The CA rendered a decision partially granting the petition, in
that the money claims of the twenty-seven employees were granted.
ISSUE:
1.Whether or not the strike staged by the officers and members of the Union was illegal;
2.Whether the petitioner Union's officers were legally dismissed; and
HELD: The petition is bereft of merit.
The petitioners assert that the respondent Foundation failed to prove that the petitioners
and their counsel were served with copies of the Return-to-Work Order issued by the Secretary of
Labor and Employment and that, consequently, they could not have defied the same. Hence, they
insist they were illegally dismissed by the respondent Foundation. We do not agree.

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It bears stressing that the sheriff's report is an official statement by him of his acts under
the writs and processes issued by the court in obedience to its directive and in conformity with law.
In the absence of contrary evidence, a presumption exists that a sheriff has regularly performed his
official duty. To controvert the presumption arising therefrom, there must be clear and convincing
evidence. In this case, the petitioners failed to adduce clear and convincing evidence to overcome
the presumption. The bare denial by the petitioners of receiving copies of the order will not
suffice.
Despite the receipt of an order from then SOLE to return to their respective jobs, the Union
officers and members refused to do so and defied the same. Consequently, then, the strike staged
by the Union is a prohibited activity under Article 264 of the Labor Code. Hence, the dismissal of its
officers is in order. The respondent Foundation was, thus, justified in terminating the employment
of the petitioner Union's officers.
On the last issue, the petitioners failed to prove their claim that the respondent Foundation
committed unfair labor practices and discrimination of its employees. We agree with the following
discerning findings and encompassing disquisitions of the Court of Appeals on this issue. The
records of this case do not show any hint that Calucin's [Jr.'s] dismissal is due to his trade union
activities. On the other hand, per findings of the public respondent, the Foundation was able to
support with documents how Calucin [Jr.] declared himself irrelevant in the Foundation through his
tardiness and shallow excuses. For the foregoing reasons, Calucin, Jr.'s dismissal is valid.
CONSEQUENCE OF AN ILLEGAL STRIKE
STAMFORD MARKETING CORPORATION vs. JOSEPHINE JULIAN

[G.R. No. 145496. February 24, 2004]
QUISUMBING, J.:
FACTS: The instant controversy stemmed from a letter sent by De La Cruz, Jr., president of the
Philippine Agricultural, Commercial and Industrial Workers’ Union (PACIWU-TUCP), to Rosario A.
Apacible, the treasurer and general manager of herein petitioners. Said letter advised Apacible
that the rank-and-file employees of the aforementioned companies had formed the Apacible
Enterprise Employees’ Union-PACIWU-TUCP. The union demanded that management recognize its
existence. Shortly thereafter, discord reared its ugly head, and rancor came hard on its wake.
Josephine Julian, et al. vs. Stamford Marketing Corp.

NLRC NCR Case No. 00-11-08124-94
A day after Apacible received the letter of PACIWU-TUCP, herein private respondents
Josephine Julian, president of the newly organized labor union; Jacinta Tejada, and Jecina
Burabod, board member and member of the said union, respectively, were effectively dismissed
from employment.
The three dismissed employees filed suit with the Labor Arbiter. In their Complaint, the
three dismissed employees alleged that petitioners had not paid them their overtime pay, holiday
pay/premiums, rest day premium, 13th month pay for the year 1994, salaries for services actually
rendered, and that illegal deduction had been made without their consent from their salaries for a
cash bond. For its part, herein petitioner Stamford alleged that private respondents abandoned
their work without any a notice or an explanation.
Philippine Agricultural, Commercial and

Industrial Workers’ Union, et al. vs. GSP Manufacturing Corp.

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PACIWU-TUCP, filed on behalf of 50 employees allegedly illegally dismissed for union
membership by the petitioners, a Complaint before the Arbitration Branch of NLRC, Metro Manila.
PACIWU-TUCP charged petitioners herein with unfair labor practice. The Complaint alleged that
when Apacible received the letter of PACIWU-TUCP, management began to harass the members of
the local chapter, a move which culminated in their outright dismissal from employment, without
any just or lawful cause. It was a clear case of union-busting, averred PACIWU-TUCP. GSP
Manufacturing Corporation (GSP) denied the union’s averments. It claimed that it had verified with
the Bureau of Labor Relations (BLR) whether a labor organization with the name Apacible
Enterprises Employees’ Union was duly registered. It was informed that no such labor organization
was registered either as a local chapter of PACIWU or of the Trade Union Congress of the
Philippines (TUCP).
Lucita Casero, et al. vs. GSP Manufacturing Corp., et al.

This separate case was also filed by the dismissed union members (complainants in NLRC
NCR Case No. 00-03-02114-95), against the petitioners herein for payment of their monetary claims.
The dismissed employees demanded the payment of (1) salary differentials due to underpayment of
wages; (2) unpaid salaries/wages for work actually rendered; (3) 13th month pay for 1994; (4) cash
equivalent of the service incentive leave; and (5) illegal deductions from their salaries for cash
bonds. Petitioner corporations, however, maintained that they have been paying complainants the
wages/salaries mandated by law and that the complaint should be dismissed in view of the
execution of quitclaims and waivers by the private respondents.
The Labor Arbiter ordered the three cases consolidated as the issues were interrelated and
the respondent corporations were under one management.
Labor Arbiter Reyes ruled the reassignment and transfer of complainants in NLRC NCR Case
No. 00-11-08124-94 as unfair labor practice, it being management interference in the
complainants’ formation and membership of union. In NLRC NCR Case No. 00-03-02114-95, it was
duly established that the employees’ union was not registered with the Bureau of Labor Relations.
Hence, private respondents had engaged in an illegal strike since the right to strike maybe availed
of only by a legitimate labor organization. In NLRC NCR Case No. 00-01-10437-95, the Labor Arbiter
found petitioners liable for salary differentials and other monetary claims for petitioners’ failure to
sufficiently prove that it had paid the same to complainants as required by law.
Petitioners herein seasonably appealed the decision of Labor Arbiter Reyes. Subsequently,
the NLRC affirmed the decision in NLRC NCR Case Nos. 00-11-08124-94 and 00-01-10437-95.
However, the NLRC set aside the judgment with respect to NLRC NCR Case No. 00-03-02114-95 and
ordered the remand of the case for further proceedings. Petitioners then moved for
reconsideration of the NLRC ruling, citing the ruling in NLRC NCR Case No. 05-03064-96 to support
their position that respondents herein had conducted an illegal strike and were liable for unlawful
acts. The NLRC resolved to partly grant the Motion for Reconsideration.
Unwilling to let the matter rest there, petitioners then filed a special civil action for
certiorari with the Court of Appeals which brushed aside petitioners’ theory that the illegality of
strike makes the respondents’ dismissal legal. The Court of Appeals affirmed the finding of the
NLRC that petitioners had failed to support their claim of having paid herein respondents their
money claims, because belated evidence presented by petitioners is bereft of any probative value.
Petitioners timely moved for reconsideration, but the appellate court denied said motion.
ISSUES:
1. Whether the respondents union officers and members were validly and legally dismissed
from employment considering the illegality of the strike;
2. Whether the respondents union officers and members are entitled to backwages,
separation pay and reinstatement, respectively.

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HELD:
(1) In the instant case, we find no reason to disagree with the findings of the NLRC that the
strike conducted by the respondent union is illegal. First, it has not been shown to the satisfaction
of this Court that said union is a legitimate labor organization, entitled under Article 263 (c) to file
a notice of strike on behalf of its members. Second, the other requirements under Article 263 (c)
and (f) were not complied with by the striking union. On this matter, the record is bare of any
showing to the contrary.
Article 264 of the Labor Code, in providing for the consequences of an illegal strike, makes
a distinction between union officers and members who participated thereon. Thus, knowingly
participating in an illegal strike is a valid ground for termination from employment of a union
officer. The law, however, treats differently mere union members. Mere participation in an illegal
strike is not a sufficient ground for termination of the services of the union members. The Labor
Code protects an ordinary, rank-and-file union member who participated in such a strike from
losing his job, provided that he did not commit an illegal act during the strike. Thus, absent any
clear, substantial and convincing proof of illegal acts committed during an illegal strike, an
ordinary striking worker or employee may not be terminated from work.
On this point, we affirm the findings of the appellate court that Julian and Tejada did not
abandon their employment. Petitioners utterly failed to show proof that Julian and Tejada had the
intent to abandon their work and sever their employment relationship with petitioners. It is
established that an employee who forthwith takes steps to protest his layoff cannot be said to have
abandoned his work. However, we cannot sustain the appellate court’s ruling that the dismissal of
Julian and Tejada was tantamount to unfair labor practice. There is simply nothing on record to
show that Julian and Tejada were discouraged or prohibited from joining any union. Hence, the
petitioners cannot be held liable for unfair labor practice.
With respect to union officers, however, there is no dispute they could be dismissed for
participating in an illegal strike. Union officers are duty- bound to guide their members to respect
the law. Nonetheless, as in other termination cases, union officers must be given the required
notices for terminating an employment, i.e., notice of hearing to enable them to present their
side, and notice of termination, should their explanation prove unsatisfactory. Nothing in Article
264 of the Labor Code authorizes an immediate dismissal of a union officer for participating in an
illegal strike. In this case, petitioners did not give the required notices to the union officers.
We affirm the appellate court’s ruling that the union members who are parties herein were
illegally dismissed and thus, entitled to reinstatement and payment of backwages for lack of
sufficient evidence that they engaged in illegal acts during the strike. They were in good faith in
believing that their actions were within the bounds of the law, since such were meant only to
secure economic benefits for themselves so as to improve their standard of living. Besides, it is not
the business of this Court to determine whether the acts committed by them are illegal, for review
of factual issues is not proper in this petition. Review of labor cases elevated to this Court on a
petition for review on certiorari is confined merely to questions of law, and not of fact, as factual
findings generally are conclusive on this Court.
(2) For the same reasons, we likewise affirm the Court of Appeals in upholding the findings
of both the NLRC and the Labor Arbiter regarding the validity or invalidity of quitclaims and the
award of other monetary claims. Questions on whether the quitclaims were voluntarily executed or
not are factual in nature. Thus, petitioners’ appeal for us to re-examine certain pieces of
documentary evidence concerning monetary claims cannot now be entertained. It is not our
function to assess and evaluate the evidence all over again, particularly where the findings of both
the Arbiter and the Court of Appeals coincide.
Dismissal of the union officers is declared NOT INVALID, and the award of separation pay to
said union officers is hereby DELETED. However, as a sanction for non-compliance with notice

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requirements for lawful termination by the petitioners, backwages are AWARDED to the union
officers computed from the time they were dismissed until the final entry of judgment of this case.
BOOK VI
PROBATIONARY PERIOD UNDER SECTION 2, RULE VII, OF THE RULES IMPLEMENTING THE CIVIL
SERVICE LAW
GALLARDO U. LUCERO vs. COURT OF APPEALS, ET AL.

[G.R. No. 152032 July 3, 2003]
VITUG, J.:
FACTS: Petitioner was hired by Excellent Manpower Services, a manning agency, which used to
supply the manpower requirements of the PNB, to work as an administrative assistant at the bank's
cash division. petitioner was given by the PNB an original appointment as Liaison Officer I, with a
permanent status, thereby foregoing his previous relationship with the bank, as aforesaid, and
accepting thereby the terms appurtenant to his new appointment.
Ledesma, Vice-President of the Human Resources Department (HRD) of the PNB, issued a
memorandum to Gaerlan, then Vice-President of the Cash Division, informing the latter that the
management approved the termination of services of Lucero due to the "unsatisfactory"
performance rating obtained by him during the probationary period of his employment. Acting on
the memorandum, Gaerlan wrote to the HRD requesting that Lucero's name be dropped from the
official roll of PNB employees effective at the close of business hours. Meanwhile, Lucero was
served his termination papers.
Lucero wrote to the Civil Service Commission protesting his dismissal by the PNB and asking
for his reinstatement. The CSC referred Lucero's letter to the PNB for comment and appropriate
action. In compliance with the directive of the CSC, the PNB wrote to Lucero and furnished him
with copies of the evaluation reports of his superiors at the bank. The CSC acknowledged the
response of the PNB to the former's letter regarding Lucero's complaint and informed the PNB that
it considered the complaint "closed." Lucero filed a complaint for illegal dismissal against the PNB
before the Labor Arbiter. The Labor Arbiter dismissed the complaint for lack of jurisdiction. Lucero
went on appeal to the NLRC. The NLRC issued its judgment, which reversed the assailed decision of
the Labor Arbiter and held that Lucero had been illegally dismissed by the PNB.
The PNB, nevertheless, filed with the Court of Appeals a petition for certiorari under Rule
65 of the 1997 Rules of Procedure, contending that the NLRC committed grave abuse of discretion
in assuming jurisdiction over the case and in ruling that Lucero's dismissal was illegal. the Court of
Appeals rendered a decision to the effect that the NLRC properly assumed jurisdiction over the
case; nevertheless, it found Lucero not to have been illegally dismissed. Lucero filed a motion for
reconsideration; the Court of Appeals denied the motion.
ISSUES:
1. Whether or not Lucero is covered under the Civil Service Law or Labor Law;
2. Whether or not Lucero’s appointment is on regular basis at the time of his dismissal;
and
3. Whether or not the Court of Appeals erred in not taking in consideration the subsequent
high performance rating of Lucero.
HELD:
(1) At the time of the appointment, PNB was still a government agency subject to civil
service rules and regulations that, among other things, subjected appointments "into the career
service under a permanent status" to a probationary period.
Section 2, Rule VII, of the Rules Implementing the Civil Service Law reads: "Section 2.
Original appointment refers to initial entry into the career service under a permanent
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status of a person who meets all the requirements of the position including the civil service
eligibility."(a) All such persons must serve a probationary period of six (6) months following their
original appointment and shall undergo a thorough character investigation. A probationer may be
dropped from the service for unsatisfactory conduct or want of capacity anytime before the
expiration of the probationary period: Provided, that such action is appealable to the
Commission."
(2) The Court of Appeals, reiterating the findings of the NLRC, held that at the time of the
services of petitioner were dispensed with the PNB when he was still under probationary status,
i.e., that he was still on trial during which time his qualification for his career employment would
be determined. The performance by Gallardo was found inadequate by the PNB that entitled it to
drop him from the service. Whether, indeed, that performance was satisfactory or unsatisfactory,
was a factual question best addressed for final determination by the Court of Appeals, the findings
on which, when supported by substantial evidence, would be binding on this Court.
(3) In the instant case, Lucero proved himself unworthy of permanent employment.
Consequently, PNB cannot be faulted for terminating his services. It would be difficult to sustain
the stand taken by petitioner that the Court of Appeals erred in ignoring his subsequent high
performance rating. The high rating of "very satisfactory" obtained by petitioner after his
reinstatement, in compliance with the order of the NLRC, was not controlling, the point in question
being his performance during the probationary period of the employment.
PROBATIONARY EMPLOYEE
FLORENCIO M. DE LA CRUZ, JR. vs. NATIONAL LABOR RELATIONS COMMISSION

[G.R. No. 145417. December 11, 2003.]
CORONA, J.:
FACTS: petitioner Florencio M. de la Cruz, Jr. was hired by private respondent Shemberg Marketing
Corporation (Shemberg) as senior sales manager with a monthly salary of P40,500. The position of
senior sales manager was then newly created in line with Shemberg's objective of product
positioning in the consumer market.
However, Shemberg's human resource department manager, Llanto, summoned petitioner

and informed him of the management's decision to terminate his services. Petitioner asked Llanto
for something to do with the drop in the company's sales. Petitioner then requested a meeting with
Shemberg's vice president, Dacay, Jr., but was told that the decision of the management was final.
His request to be furnished a 30-day written notice was also denied by the management. Hence,
petitioner filed a complaint for illegal dismissal, non-payment of salary, backwages, 13th month
pay and damages against Shemberg, Ernesto Dacay, Jr. and Lilybeth Llanto.
Respondents answered that petitioner's dismissal was due to his failure to meet the
required company standards and for loss of trust and confidence. In a decision labor arbiter
Carreon ruled that petitioner Florencio de la Cruz was illegally dismissed and granted his claim for
separation pay, backwages and unpaid wages. On appeal by respondents, the NLRC dismissed the
appeal. The NLRC partially granted the motion for reconsideration and modified its previous
resolution. Petitioner elevated the case to the Court of Appeals on a petition for certiorari but it
was dismissed for lack of merit. His subsequent motion for reconsideration was likewise denied.
Hence, this petition.
ISSUES: Whether or not the Court of Appeals committed reversible error when it refused to award
backwages notwithstanding the fact that respondent failed to comply with the two-notice
requirement.
HELD: The petition is without merit.

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Petitioner was holding a managerial position in which he was tasked to perform key
functions in accordance with an exacting work ethic. His position required the full trust and
confidence of his employer. While petitioner could exercise some discretion, this obviously did not
cover acts for his own personal benefit. As found by the court a quo, he committed a transgression
that betrayed the trust and confidence of expenses out of company funds. Petitioner failed to
present any persuasive evidence or argument to prove otherwise. His act amounted to fraud or
deceit which led to the loss of trust and confidence of his employer.
We reiterate the well-established rule that findings of fact of the Court of Appeals are
conclusive on the parties and are not generally reviewable by this Court when supported by
substantial evidence. The rationale is that this Court, not being a trier of facts, relies in good part
on the assessment and evaluation of evidence by the lower courts. We thus subscribe to the
following findings of the Court of Appeals in affirming the NLRC decision, that petitioner's dismissal
was for a just cause.
With respect to the unauthorized use of company funds, there appears to be substantial
evidence to show that petitioner indeed is guilty of the same — but only with respect to the
reimbursement of plane ticket fares. Technicalities should not be permitted to stand in the way of
equitably and completely resolving the rights and obligations of the parties. Petitioner vigorously
contends that he was not a probationary employee since Shemberg failed to disclose to him the
reasonable standards for qualifying as a regular employee. This Court notes, however, the
evidence on record clearly showing that petitioner was well informed of the standards to be met
before he could qualify as a regular employee.
A probationary employee is one who, for a given period of time, is under observation and
evaluation to determine whether or not he is qualified for permanent employment. During the
probationary period, the employer is given the opportunity to observe the skill, competence and
attitude of the employee while the latter seeks to prove to the employer that he has the
qualifications to meet the reasonable standards for permanent employment. The length of time is
immaterial in determining the correlative rights of both the employer and the employee in dealing
with each other during said period.
There is no dispute that petitioner, as a probationary employee, enjoyed only temporary

employment status. In general terms, this meant that he was terminable anytime, permanent
employment not having been attained in the meantime. The employer could well decide he no
longer needed the probationary employee's services or his performance fell short of expectations,
etc. As long as the termination was made before the expiration of the six-month probationary
period, the employer was well within his rights to sever the employer-employee relationship. A
contrary interpretation would defect the clear meaning of the term "probationary." In this case,
respondent Shemberg had good reason to terminate petitioner's employment and that was his
dishonesty.
PROBATIONARY PERIOD
RADIN C. ALCIRA vs. NLRC, ET AL.

G.R. No. 149859 June 9, 2004
CORONA, J.:
FACTS: Respondent Middleby Philippines Corporation (Middleby) hired petitioner as engineering
support services supervisor on a probationary basis for six months. Apparently unhappy with
petitioner's performance, respondent Middleby terminated petitioner's services. The bone of
contention centered on whether the termination occurred before or after the six-month
probationary period of employment.
The parties, presenting their respective copies of Alcira's appointment paper, claimed
conflicting starting dates of employment: May 20, 1996 according to petitioner and May 27, 1996
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according to respondent. Both documents indicated petitioner's employment status as "probationary
(6 mos.)" and a remark that "after five months (petitioner's) performance shall be evaluated and
any adjustment in salary shall depend on (his) work performance." Petitioner asserts that
respondent Middleby withheld his time card and did not allow him to work. Contending he has
become a regular employee as of the said date of Nov. 20 he claimed he was illegally dismissed.
Respondents claim he showed poor performance in his assigned tasks. The labor arbiter dismissed
the complaint on the ground that petitioner's dismissal was before his "regularization," considering
that, counting from May 20, 1996, the six-month probationary period ended on November 20, 1996.
NLRC affirmed the decision of the labor arbiter. The Court of Appeals affirmed the judgment of the
NLRC. Hence, this petition for review.
ISSUE:
1. Whether or not, the petitioner was allowed to work beyond his probationary period and
was therefore already a regular employee at the time of his alleged dismissal;
2. Whether or not, petitioner was illegally dismissed when respondent Middleby opted not
to renew his contract on the last day of his probationary employment.
HELD:
(1) NO. In CALS Poultry Supply Corporation, et al. vs. Roco, et al., this Court dealt with the
same issue of whether an employment contract from May 16, 1995 to November 15, 1995 was
within or outside the six-month probationary period. We ruled that November 15, 1995 was still
within the six-month probationary period. Our computation of the 6-month probationary period is
reckoned from the date of appointment up to the same calendar date of the 6th month following.
In short, since the number of days in each particular month was irrelevant, petitioner was still a
probationary employee when respondent Middleby opted not to "regularize" him on November 20,
1996.
(2) It is settled that even if probationary employees do not enjoy permanent status, they
are accorded the constitutional protection of security of tenure. This means they may only be
terminated for just cause or when they otherwise fail to qualify as regular employees in accordance
with reasonable standards made known to them by the employer at the time of their engagement.
But we have also ruled in Manlimos, et al. vs. National Labor Relations Commission that this
constitutional protection ends on the expiration of the probationary period. On that date, the
parties are free to either renew or terminate their contract of employment. Manlimos concluded
that "(t)his development has rendered moot the question of whether there was a just cause for the
dismissal of the petitioners." In the case at bar, respondent Middleby exercised its option not to
renew the contract when it informed petitioner on the last day of his probationary employment
that it did not intend to grant him a regular status. Although we can regard petitioner's severance
from work as dismissal, the same cannot be deemed illegal.
DISMISSAL; JUST AND VALID CAUSES
PHIL. EMPLOY SERVICES and RESOURCES, INC. vs. JOSEPH PARAMIO, ET AL.
[G.R. No. 144786 April 15, 2004]
CALLEJO, SR., J.:

FACTS: Respondents applied for employment in Taiwan with petitioner, Phil. Employ Services and
Resources, Inc. (PSRI for brevity). They paid P19,000 each as placement fee. The respondents were
deployed in Taiwan. When they encountered problems, they brought their attention to the manager
who told them to forget about it and refrain to air their complaints.
Respondent Navarra and another employee, Pio Gabito, were summoned by the
management and told that they were to be repatriated, without specifying the ground or cause
therefor. They pleaded that they be informed of the cause or causes for their repatriation, but
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their requests were rejected. The manager of their employer summoned the police, who arrived
and escorted them to the airport. Upon respondent Navarra's arrival in Manila, the petitioner
sought to settle his complaints. After the negotiations, the petitioner agreed to pay P49,000 to the
said respondent but, in consideration thereof, the latter executed a quitclaim releasing the
petitioner from any or all liabilities for his repatriation.
Respondent Paramio got ill as a result of the employer's failure to give breakfast on the said
date and dinner the night before. His manager still ordered him to work. When he pleaded that he
be allowed to take some rest, the manager refused. Respondent Paramio was, instead, made to
carry a container weighing around 30 kilograms. Due to his condition, the container slipped from his
hands and he injured his thumb. He was brought to the hospital where he was operated on and
treated for his wound. Instead of giving him financial assistance for his hospital bills, his employer
told him a week after his release from the hospital that it would be better for him to go home to
the Philippines to recuperate. An official from the Taiwanese Labor Department intervened for
respondent Paramio and his employer was told that it had no right to repatriate the respondent
because the accident which caused the injury happened while the latter was at work.
When he could no longer bear the pain in his thumb, he took a break. When the manager
saw him resting, he was ordered to return to work. Respondent Paramio refused and contended
that he could not resume work because of his thumb injury. Incensed, the manager told him that he
had to stop working and would just have to wait for his plane ticket for his repatriation. The
respondent did as he was told. For failure to report to work, he was asked to explain the reason
thereof. He was given his paycheck and later in the evening of the same day, respondent Paramio
was repatriated to the Philippines.
The Labor Arbiter declared that the dismissal of the respondents were illegal. The NLRC set
aside the decision of the NLRC. The respondents filed a motion for reconsideration of the
resolution, but the NLRC denied the motion in a Resolution. Hence this petition for certiorari.
ISSUES:
1. Whether or not, the petitioners were illegally dismissed when they repatriated by their
Taiwan employees.
2. Whether or not, Navarra’s repatriation and execution of quitclaim and receipt of P 49,
000 sufficient to conclude his waiver of right against illegal dismissal.
HELD:
(1) Yes. Respondents’ dismissal was not based on just, valid and legal grounds. As such, the
rule lex loci contractus (the law of the place where the contract is made) governs. Therefore, the
Labor Code, its implementing rules and regulations, and other laws affecting labor, apply in this
case. In order to effect a valid dismissal of an employee, the law requires that there be just and
valid cause as provided in Article 282 and that the employee was afforded an opportunity to be
heard and to defend himself. Dismissal may also be based on any of the authorized causes provided
for in Articles 283 and 284 of the Labor Code.
The petitioner failed to substantiate its claim that respondent Navarra's repatriation was
based on a valid, legal and just cause. The petitioner merely alleged that it was made clear to
respondent Navarra that his repatriation was due to the fight he had with his supervisor. It is not
necessary that there be an express termination of one's services before a case of illegal dismissal
can exist. In the landmark case of Philippine Japan Active Carbon Corporation vs. National Labor
Relations Commission, et al (171 SCRA 164) the Supreme Court ruled that "a constructive discharge
is defined as: "A quitting because continued employment is rendered impossible, unreasonable or
unlikely:" In the case at bar, the petitioners were made to suffer unbearable conditions in the
workplace and the inhuman treatment of their employer until they were left with no choice but to
quit. Thus, it cannot be said that the resignation and repatriation of complainants Curameng,
Bautista, Sarmienta and Guillermo was voluntary.

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It cannot be gainsaid that the instant complaint for illegal dismissal indicates that the
resignations and repatriations of the petitioners were not done freely on their part. It is highly
unlikely that these workers, after having invested so much time, effort and money to secure their
employment abroad would just quit even before the expiration of their contract. We have more
reason to rule that the repatriations of petitioners Paramio and Navarra were not voluntary.
We thus rule that the respondents were constructively dismissed from their employment.
There is constructive dismissal if an act of clear discrimination, insensibility, or disdain by an
employer becomes so unbearable on the part of the employee that it would foreclose any choice by
him except to forego his continued employment. It exists where there is cessation of work because
"continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a
demotion in rank and a diminution in pay."
(2) We rule that the deed of release executed by respondent Navarra did not completely
release the petitioner from its liability on the latter's claim. As a rule, quitclaims, waivers or
releases are looked upon with disfavor and are commonly frowned upon as contrary to public policy
and ineffective to bar claims for the measure of a worker's legal rights. If (a) there is clear proof
that the waiver was wangled from an unsuspecting or gullible person; or (b) the terms of the
settlement are unconscionable, and on their face invalid, such quitclaims must be struck down as
invalid or illegal.
The records reveal that respondent Navarra executed a deed of release and waiver for and
in consideration of only P49,000. There is no evidence that he was informed that he was entitled
to much more than the said amount, including a refund for the placement fee he paid to the
petitioner. With regard to the deed of quitclaim and acceptance, it is a well-settled principle that
the law does not consider as valid any agreement to receive less compensation than what a worker
is entitled to recover nor prevent him from demanding benefits to which he is entitled. Quitclaims
executed are ineffective to bar recovery for the full measure of the worker's rights. The reason why
quitclaims are commonly frowned upon as contrary to public policy and they are ineffective to bar
claims for the full measure of the worker's legal rights is because the employer and employee do
not stand on the same footing, such that quitclaims usually take the form of contracts of
adherence, not of choice. Assuming arguendo that the quitclaim was executed voluntarily, still, it
cannot diminish petitioner's entitlement to the full compensation provided in their contract. At the
most, such amount can be considered an advance on his claim.
ART. 282; TERMINATION OF EMPLOYMENT; BREACH OF TRUST; WHEN WILLFUL
DIAMOND MOTORS CORP. vs. COURT OF APPEALS, ET AL.

[G.R. No. 151981. December 1, 2003]
FACTS: Petitioner Diamond Motors Corporation hired respondent Cadao and subsequently appointed
him Special Accounts Manager with a fixed monthly salary excluding commission for every car sold.
His tasks included the promotion and sale of Mitsubishi vehicles to precisely listed corporate clients
on fleet basis. The transactions are usually done through letters of intent or purchase orders
submitted by the client.
TAPE, Inc. is one of petitioner's clients on a fleet sale basis. Its purchasing officer, Esper
Reate, sent three letters of intent to respondent confirming an order for three units of Mitsubishi
Lancer. TAPE, Inc. subsequently sent purchase orders to petitioner for the three units. However,
petitioner investigated the said transaction and it was found out that two customers were not
employees of TAPE, Inc. or its sister corporation, M-Zet. Therefore, the production companies
manifested that they will not pay for the purchase orders. The report further noted that Reate was
not the authorized signatory for the purchases considering that only Mr. Tuviera as the President of
TAPE, Inc., or, in his absence, Ms. Dionisio, AVP for Administration, can sign for them. Respondent
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was accused by petitioner of dishonesty and deceit in the conduct of said sale. Thereafter,
petitioner terminated the services of respondent.
Private respondent filed a complaint for illegal dismissal with prayer for the payment of
earned salary, commission and other accrued benefits against the petitioner before the NLRC. The
Labor Arbiter dismissed the complaint for lack of merit. Aggrieved, private respondent appealed to
the NLRC which reversed the decision of the Labor Arbiter and declared his dismissal illegal.
Respondent was awarded separation pay plus backwages. Thereafter, petitioner filed a petition for
review with the CA. Petitioner maintained that respondent's dismissal was for a valid cause
pursuant to Article 282 of the Labor Code and jurisprudence. The CA however dismissed the
petition and affirmed the decision of the NLRC. Hence, this petition.
ISSUE: Whether or not respondent’s dismissal from service was illegal.
HELD: NO. Article 282(c) of the Labor Code, as amended, provides that an employer can terminate
the employment of the employee concerned for "fraud or willful breach by an employee of the trust
reposed in him by his employer or duly authorized representative." The loss of trust and confidence
must be based on the willful breach of the trust reposed in the employee by his employer. Ordinary
breach will not suffice. A breach of trust is willful if it is done intentionally, knowingly and
purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly,
heedlessly or inadvertently.
The guidelines for the application of the doctrine of loss of confidence was laid down in the
case of Concorde Hotel v. CA, i.e., (a) the loss of confidence should not be simulated; (b) it should
not be used as a subterfuge for causes which are improper, illegal or unjustified; (c) it should not
be arbitrarily asserted in the face of overwhelming evidence to the contrary; and (d) it must be
genuine, not a mere afterthought to justify earlier action taken in bad faith.
In the case at bar, the Labor Arbiter ruled that based on the evidence adduced by the
parties, respondent knowingly violated company rules and regulations. There was also a clear taint
of deceit on his part when he passed off what was otherwise a retail sale as a fleet sale. Indeed,
respondent cannot deny that at the time he was negotiating what he claimed to be a fleet sale to
TAPE, Inc., he already knew that the would-be end users are not employees of TAPE, Inc. The fact
that respondent attempted to deprive petitioner of its lawful revenue is tantamount to fraud
against the company, which warrants dismissal from the service.
ART. 282, LABOR CODE; TERMINATION BY EMPLOYER, GROUNDS THEREFOR.
PT & T CORP. vs. COURT OF APPEALS, ET AL.

G.R. No. 152057. September 29, 2003
CALLEJO, SR., J.:

FACTS: The petitioner is a domestic corporation engaged in the business of providing telegraph and
communication services thru its branches all over the country. It employed various employees,
among whom were private respondents. The petitioner came up with a Relocation and
Restructuring Program. Private respondents received separate letters from the petitioner, giving
them the option to choose the branch to which they could be transferred. Thereafter, the private
respondents and other petitioner's employees were directed to "relocate" to their new PT&T
Branches.
The petitioner offered benefits/allowances to those employees who would agree to be

transferred under its new program. Moreover, the employees who would agree to the transfers
would be considered promoted. The private respondents rejected the petitioner's offer. Hence, the
petitioner sent letters to the private respondents requiring them to explain in writing why no
disciplinary action should be taken against them for their refusal to be transferred/relocated. In
their respective replies to the petitioner's letters, the private respondents explained that the
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transfers imposed by the management would cause enormous difficulties on the individual
complainants. Dissatisfied with this explanation, the petitioner considered the private respondents'
refusal as insubordination and willful disobedience to a lawful order; hence, the private
respondents were dismissed from work. Subsequently, the private respondents' bargaining agent,
PT&T Workers Union-NAFLU-KMU, filed a complaint against the petitioner for illegal dismissal and
unfair labor practice for and in behalf of the private respondents.
For its part, the petitioner alleged that the private respondents' transfers were made in the
lawful exercise of its management prerogative and were done in good faith. In their reply to the
petitioner's position paper, the private respondents opined that since their respective transfers
resulted in their promotion, they had the right to refuse or decline the positions being offered to
them. Resultantly, the refusal to accept the transfers could not have amounted to insubordination
or willful disobedience to the "lawful orders of the employer."
ISSUE:
1. Whether or not the respective transfers of the private respondents are considered
promotions;
2. Whether or not the denial of a promotion is a just and authorized cause for dismissal?
HELD:
(1) Yes. With or without a corresponding increase in salary, the respective transfers of the
private respondents were in fact promotions, following the ruling enunciated in Homeowners
Savings and Loan Association, Inc. v. NLRC: “Promotion, as we defined in Millares v. Subido, is ‘the
advancement from one position to another with an increase in duties and responsibilities as
authorized by law, and usually accompanied by an increase in salary.’ Apparently, the
indispensable element for there to be a promotion is that there must be an ‘advancement from one
position to another’ or an upward vertical movement of the employee's rank or position. Any
increase in salary should only be considered incidental but never determinative of whether or not a
promotion is bestowed upon an employee.
(2) No. An employee cannot be promoted, even if merely as a result of a transfer, without
his consent. A transfer that results in promotion or demotion, advancement or reduction or a
transfer that aims to 'lure the employee away from his permanent position cannot be done without
the employees' consent. There is no law that compels an employee to accept a promotion for the
reason that a promotion is in the nature of a gift or reward, which a person has a right to refuse.
Hence, the exercise by the private respondents of their right cannot be considered in law as
insubordination, or willful disobedience of a lawful order of the employer. As such, there was no
valid cause for the private respondents' dismissal.
ART. 282; TERMINATION BY EMPLOYER
SAMUEL SAMARCA vs. ARC-MEN INDUSTRIES, INC.

[G.R. No. 146118. October 8, 2003]
FACTS: Samuel Samarca was employed as a laborer by Arc-Men Industries, Inc. Petitioner filed an
application for an emergency leave of absence on account of his son's hospitalization. Upon his
return for work, petitioner was immediately served with a notice of respondent's order suspending
him for thirty (30) days effective for alleged violation of company Rules and Regulations. Petitioner
filed with the Regional Arbitration Branch a complaint for illegal suspension against respondent.
During the pendency of this complaint, petitioner's 30-day suspension ended. Consequently,
respondent directed petitioner to report for work immediately. However, he refused explaining
that because of the pendency of his complaint for illegal suspension with the Labor Arbiter, he
could not report for work. Respondent, finding that the petitioner failed to submit a sufficient

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written explanation, decided to terminate his services via a notice of termination. Petitioner filed
an amended complaint for illegal dismissal.
The Labor Arbiter dismissed the case for lack of merit and declaring the dismissal of
complainant as valid and for cause but the complainant is entitled to his proportionate 13th month
pay. On appeal, the NLRC reversed and set aside the Labor Arbiter's Decision, ordering respondent
to reinstate petitioner to his former position without loss of seniority rights and to pay his
backwages from the date of dismissal up to his actual reinstatement but limited to a maximum
period of three (3) years. Respondent filed a motion for reconsideration but was denied with
finality by the NLRC. Respondent filed with the Supreme Court a petition for certiorari. The SC
referred the petition for disposition to the Court of Appeals. The Court of Appeals rendered a
Decision reversing the Resolutions of the NLRC and reinstating the Decision of the Labor Arbiter.
Petitioner filed a motion for reconsideration but was denied in a Resolution. Hence, this petition
for review on certiorari.
ISSUE: Whether or not petitioner was validly dismissed on ground of abandonment of work.
HELD: Jurisprudence holds that for abandonment of work to exist, it is essential (1) that the
employee must have failed to report for work or must have been absent without valid or justifiable
reason; and (2) that there must have been a clear intention to sever the employer-employee
relationship manifested by some overt acts. Deliberate and unjustified refusal on the part of the
employee to go back to his work post and resume his employment must be established. Absence
must be accompanied by overt acts unerringly pointing to the fact that the employee simply does
not want to work anymore. And the burden of proof to show that there was unjustified refusal to go
back to work rests on the employer.
We hold that the above twin essential requirements for abandonment to exist are not
present in the case at bar. Petitioner's absence is not without a justifiable reason. The filing of a
complaint for illegal dismissal is inconsistent with the charge of abandonment, for an employee
who takes steps to protest his dismissal cannot by logic be said to have abandoned his work.
Moreover, we find no indication that petitioner has shown by some overt acts his intention to sever
the employer-employee relationship. Finally, it was unlikely that petitioner had abandoned his job
for no reason at all considering the hardship of the times.
Petitioner did not abandon his job but was illegally dismissed by respondent. An employee
who is unjustly dismissed from work is entitled to reinstatement without loss of seniority rights and
other privileges as well as to his full backwages, inclusive of allowances, and to other benefits or
their monetary equivalent computed from the time his compensation was withheld from him up to
the time of his actual reinstatement. However, the circumstances obtaining in this case do not
warrant the reinstatement of petitioner. Antagonism caused a severe strain in the relationship
between him and respondent. Respondent is hereby ordered to pay petitioner (1) his separation pay
(in lieu of his reinstatement) equivalent to one month pay for every year of service; and (2) his full
backwages inclusive of allowances and other benefits or their monetary equivalent from his
dismissal up to the time of his supposed actual reinstatement.
ABANDONMENT OF WORK
R TRANSPORT CORP. vs. ROGELIO EJANDRA

[G.R. No. 148508 May 20, 2004]
CORONA, J.:
FACTS: Private respondent Ejandra alleged that, for almost six years, he worked as a bus driver of
petitioner R Transport Corporation. An officer of LTO of Guadalupe, Makati City, apprehended him
for obstruction of traffic for which his license was confiscated. He was able to retrieve his license
only after a week. Private respondent informed Mr. Pasquin that he was ready to report for work.
However, he was told that the company was still studying whether to allow him to drive again.
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Private respondent was likewise accused of causing damage to the bus he used to drive. He was
asked to take a vacation which the manager did not specify for how long. Petitioner claimed that
private respondent abandoned his job. He also claimed that there was no employer and employee
relationship between him and the respondent. Labor arbiter Rogelio Yulo decided in favor of
private respondent. NLRC rendered a decision affirming the decision of the labor arbiter.
In disputing petitioner's claim that private respondent was not its employee and was not
therefore entitled to notice and hearing before termination, the NLRC held that complainant was
not afforded his right to due process prior to the severance of his employment with respondents.
Appellants' defense of denying the existence of employer-employee relationship with the
complainant based on the manner by which complainant was being paid his salary, cannot hold
water.
ISSUE: Whether or not, the respondent abandoned his work.
HELD: No, to constitute abandonment, two elements must concur: (1) the failure to report for work
or absence without valid or justifiable reason and (2) a clear intention to sever the employer-
employee relationship. Of the two, the second element is the more determinative factor and
should be manifested by some overt acts. Mere absence is not sufficient. It is the employer who has
the burden of proof to show a deliberate and unjustified refusal of the employee to resume his
employment without any intention of returning.
In the instant case, petitioner fell short of proving the requisites. Petitioner's absence was
justified because the LTO, Guadalupe Branch, did not release his license until after a week. The
process of redeeming a confiscated license, based on common experience, depended on when the
apprehending officer turned over the same. Second, private respondent never intended to sever his
employment as he in fact reported for work as soon as he got his license back. Third, labor arbiter
Yulo correctly observed that, if private respondent really abandoned his work, petitioner should
have reported such fact to the nearest Regional Office of the Department of Labor and
Employment. Petitioner made no such report.
In addition to the fact that petitioner had no valid cause to terminate private respondent
from work, it violated the latter's right to procedural due process by not giving him the required
notice and hearing.
HEARSAY; AFFIDAVITS
ANICETO W. NAGUIT, JR. vs. NLRC, ET AL.

[G.R. No. 120474. August 12, 2003.]
CARPIO-MORALES, J.:
FACTS: Petitioner Aniceto W. Naguit, Jr., an employee of respondent Manila Electric Company
(MERALCO) was dismissed after 32 years of service. Petitioner informed his Supervisor-Branch head
Ortega, Jr. that he would render overtime work on June 6, and that after concluding his field work
on that day, he would proceed to Pagbilao, Quezon to accompany his wife to a wedding. On June 6,
petitioner arrived at the office at 7:50 a.m. At 12:00 noon, he, along with his co-employee Cabuhat
who drove his jeep, proceeded to Pagbilao, Quezon. On June 8, the timekeeper of the MERALCO
office prepared an Overtime Notice and the corresponding timesheet wherein it was reflected that
petitioner worked from 8:00 a.m. to 5:00 p.m. on June 6 and 7. Petitioner corrected the
documents by erasing the entries made for June 7, and were approved by Ortega. Petitioner was
thereafter paid for overtime work on June 6. Documents including petty cash voucher covering
Cabuhat's alleged overtime work were also prepared on account of which petitioner, as custodian
of petty cash, released to Cabuhat the meal allowance and rental for a jeep.
MERALCO wrote a letter to the petitioner regarding the incident. After hearings were
conducted, it informed petitioner that he was, for falsification of time card and encouraging and
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inducing another employee to perform an act constituting a violation of the Company Code on
Employee Discipline, dismissed from the service with forfeiture of all rights and privileges.
Petitioner filed a complaint with the NLRC against MERALCO for illegal dismissal and prayed for
reinstatement, backwages, damages, attorney's fees among others. The Labor Arbiter rendered a
decision in favor of the petitioner. MERALCO appealed the Labor Arbiter's decision to the NLRC
which reversed the decision and dismissed the complaint. Hence, this petition.
ISSUE: Whether or not the petitioner's dismissal is valid
HELD: In labor cases, this Court has consistently held that where the adverse party is deprived of
opportunity to cross-examine the affiants, affidavits are generally rejected for being hearsay,
unless the affiant themselves are placed on the witness stand to testify thereon. Thus, such
affidavits of Cabuhat are inadmissible as evidence against petitioner.
Despite the inadmissibility of the affidavits, the Court finds that MERALCO had reasonable
grounds to fault petitioner based on the sworn statements given during its investigation. As
custodian of the petty cash fund, the petitioner had the duty to ascertain that the circumstances
which brought about any claim therefrom were in order. He cannot now shirk from this
responsibility by indirectly pinning the blame on the approving officer and asserting that the
transgression was the result of mere inadvertence, given his admission that he very well knew that
Cabuhat did not conduct any field work, he having merely driven for him to Pagbilao.
Petitioner thus committed dishonesty and breached MERALCO's trust, which dishonesty calls
for reprimand to dismissal under MERALCO's rules. Dismissal is, however, too severe as a penalty in
petitioner's case, given his 32 years of service during which he had no derogatory record.
At the time petitioner was dismissed, he was still below the retirement age of employees of
MERALCO at 60. To date, however, he is now about 65. Imposing a penalty less harsh than dismissal
and ordering his reinstatement are thus functus oficio, the Labor Arbiter's order for his
reinstatement not having been executed. To this Court, a denial of the award of backwages to
petitioner from the time of his dismissal up to his age of retirement suffices as punishment for his
dishonesty. He should not, however, be deprived of his retirement benefits.
SUMMARY HEARING OF LABOR CASES; TWO-NOTICE REQUIREMENT
SHOPPES MANILA, INC vs. NATIONAL LABOR RELATIONS COMMISSION

[G.R. No. 147125. January 14, 2004]
CALLEJO, SR., J.:.

FACTS: The petitioner is a domestic corporation engaged in garments manufacturing using the
brand name “KAMISETA.” The petitioner employed private respondent Torno as trimmer. The
private respondent and a co-employee, Maricar Buan, were tasked to handle the inventory of
finished products. Sometime thereafter, the petitioner started to receive information from the
head of its production department that, according to other employees, Buan and the private
respondent had been stealing “KAMISETA” items from the factory. The petitioner had the witnesses
interviewed. Respondent agreed to have her house inspected and searched for the alleged stolen
items. The private respondent’s supervisor, conducted the inspection and submitted a report to the
effect that she found the KAMISETA items in the private respondent’s house.
On the basis of the said report, the petitioner issued a disciplinary action form suspending
the private respondent indefinitely without pay. A notice of dismissal was addressed to the private
respondent specifying the charge against her, the factual basis thereof and the imposable penalties
for the said charge if proven.
The private respondent failed to appear during the scheduled hearing. Consequently, the
petitioner decided to dismiss the private respondent from her employment. When notified of the
petitioner’s decision, the private respondent filed a complaint for illegal dismissal with prayer for
reinstatement and payment of backwages, non-payment of service incentive leave pay and 13th-
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month pay against the petitioner before the National Capital Regional Arbitration Branch. Despite
mandatory conferences, the parties did not reach an amicable settlement. In due course, they
submitted their respective position papers and replies. Acting on the motion, LA Tumanong set the
case for full blown hearing during which the witnesses can be cross-examined by the opposing
counsel. However, the hearing failed to materialize because of the absences of either the private
respondent or her counsel. In the meantime, LA Tumanong was replaced by Labor Arbiter Ermita
Abrasaldo-Cuyuca who issued an order declaring that the case was submitted for decision.
LA Cuyuca rendered a decision holding that the respondent was illegally dismissed and
directed the petitioner to pay backwages and separation pay to the private respondent. However,
according to the labor arbiter, reinstatement could no longer be effected, as the relationship
between the private respondent and the petitioner had been strained and ruptured. Aggrieved, the
petitioner appealed the decision to the NLRC, alleging that it was deprived of its right to a formal
hearing before the labor arbiter rendered her decision. LA Cuyuca’s failure to conduct a hearing
deprived the petitioner of its vested right; consequently, her decision was null and void.
The NLRC issued a resolution dismissing the appeal and affirming the decision of the labor
arbiter. The petitioner filed a motion for reconsideration which was denied by the NLRC.
Dissatisfied, the petitioner filed a petition for certiorari under Rule 65 of the Rules of Court before
the Court of Appeals. The CA rendered judgment affirming the decision of the NLRC and the finding
of both the NLRC and LA Cuyuca. The petitioner’s motion for reconsideration was denied in a CA
Resolution.
ISSUES:
1. Whether or not the absence of a formal hearing amounts to denial of petitioner’s right
to due process;
2. Whether or not termination of the private respondent’s employment was based on a
just and valid cause.
HELD: The petition is barren of merit.
(1) We agree with the CA that the petitioner did not have a vested right to a formal hearing
simply and merely because LA Tumanong granted its motion and set the case for hearing. Pursuant
to Section 5, Rule V of the New Rules of Procedure of the NLRC, the labor arbiter has the authority
to determine whether or not there is a necessity to conduct formal hearings in cases brought before
him for adjudication. The holding of a formal hearing or trial is discretionary with the labor arbiter
and is something that the parties cannot demand as a matter of right. It is entirely within his
authority to decide a labor case before him, based on the position papers and supporting
documents of the parties, without a trial or formal hearing. The requirements of due process are
satisfied when the parties are given the opportunity to submit position papers wherein they are
supposed to attach all the documents that would prove their claim in case it be decided that no
hearing should be conducted or was necessary.
(2) Similarly, we affirm the finding of the CA that the private respondent was illegally
dismissed. In order to effect a valid dismissal, the law requires that (a) there be just and valid
cause as provided under Article 282 of the Labor Code; and (b) the employee be afforded an
opportunity to be heard and to defend himself. As stated by the CA, the petitioner had failed to
show that it had complied with the two-notice requirement: (a) a written notice containing a
statement of the cause for the termination to afford the employee ample opportunity to be heard
and defend himself with the assistance of his representative, if he so desires; (b) if the employer
decides to terminate the services of the employee, the employer must notify him in writing of the
decision to dismiss him, stating clearly the reason therefor.
ABANDONMENT OF WORK

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ACD INVESTIGATION SECURITY AGENCY, INC. vs. PABLO D. DAQUERA,
[G.R. No. 147473. March 30, 2004]
FACTS: Pablo Daquera in his complaint against petitioner Alfonso Dilla, Sr. and Public Estates
Authority , alleged that he was employed as a security guard by petitioner. He was reassigned to
Public Estates Authority as a security officer . However, he was illegally suspended and thereafter
illegally dismissed for dishonesty, without prior written notice and investigation. Petitioner Dilla
claims that HE received several complaints against respondent for abandonment of post, drinking
liquor while on duty, and extortion from subordinate security guards. In an administrative
investigation, petitioner found respondent guilty of dishonesty and neglect of duty. Petitioner
reassigned him to another post. However, he refused and took a leave of absence to seek
employment elsewhere. After one week, respondent still failed to report for work and instead filed
with the Labor Arbiter a complaint against petitioner.
The Labor Arbiter declared the dismissal of the complainant as illegal and ordered for his
reinstatement, without loss of seniority rights and pay him backwages. On appeal, the NLRC,
affirmed the Arbiter’s Decision, but discharging Dilla the employer from liability. A motion for
reconsideration was denied by the NLRC. Petitioner filed with the Court of Appeals a petition for
certiorari seeking to set aside the NLRC Decision and Resolution. CA affirmed in toto the assailed
decision.
ISSUES:
1. Whether or not, dishonesty, serious misconduct and willful breach of trust are valid
causes for dismissing respondent from the service;
2. Whether or not, private respondent is entitled to reinstatement with backwages since
he abandoned his work; and
3. Whether or not, the Appellate Court erred in awarding respondent his monetary
benefits considering his quitclaim.
HELD:
(1) We have been very careful in cases of dismissal based on dishonesty, serious
misconduct, and loss of trust and confidence because the same can easily be concocted by an
abusive employer. Second, we are also not convinced that respondent abandoned his work and that
terminating his services is a lawful sanction. Deliberate and unjustified refusal on the part of the
employee to go back to his work post and resume his employment must be established. Absence
must be accompanied by overt acts unerringly pointing to the fact that the employee simply does
not want to work anymore. And the burden of proof to show that there was unjustified refusal to go
back to work rests on the employer.” However, the above twin essential requirements for
abandonment to exist are not present in the case at bar.
(2) Respondent who was illegally dismissed from work is actually entitled to reinstatement
compensation was withheld from him up to the time of his actual reinstatement. However, the
circumstances obtaining in this case do not warrant the reinstatement of respondent. Antagonism
caused a severe strain in the relationship between him and petitioner. A more equitable disposition
would be an award of separation pay equivalent to at least one month pay for every year of service
in addition to his full backwages, allowances and other benefits.
(3) Quitclaims by laborers are frowned upon as contrary to public policy and are held to be
ineffective to bar recovery for the full measure of the workers’ rights

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ILLEGAL DISMISSAL; TWO-NOTICE RULE
GUTIERREZ vs. SINGER SEWING MACHINE
FACTS: This is a complaint for illegal dismissal. Petitioner Gutierrez was hired by Singer as Audit
Assistant on contractual basis. He became an Accounts Checker on probationary status. Thereafter,
he acquired regular status as Asset Auditor when he was dismissed from employment.
It appears that Gutierrez and three other were caught watching a video tape inside the
office. Despite reminder, the group continued to watch the video. On another occasion, Gutierrez
posted at the door Department Office a notice, which read "MAIPARIT TI UMISBO DITOY," (No
Urinating Here). When asked if he had seen anyone urinate at the door where the sign was posted
and the latter replied in the negative and answered, "Gusto ko, eh" (It is my pleasure). Gutierrez
refused to remove the sign when requested to do so.
Asset Manager Consunji, in a Memo informing Gutierrez of the latter's violation of company rules
and regulations. Another Memo was issued by Mr. Consunji, worded as follows: After a thorough
investigation of the incident and after having found your explanations to be unsatisfactory and due
to your refusal to comply with my memo to you which constitutes willful defiance or disregard of
Company authority, the management deems it fitting and proper to impose upon you the penalty of
dismissal effective immediately upon receipt hereof.
ISSUES:
1. Whether or not the was a violation of due process; and
2. Whether or not the grounds relied upon were sufficient to warrant dismissal
HELD:
(1) The record shows that Singer's evidence against petitioner was based on three affidavits
made by three of its employees. On this score, we agree with the Court of Appeals in finding that in
this case procedural due process was not violated by management. Singer has shown compliance
with the two-notice requirement — first, of the intention to dismiss, indicating therein the acts or
omissions complained against; and second, of the decision to dismiss an employee — and in
between such notices, an opportunity for him to answer and rebut the charges against him.
(2) We agree with the NLRC that petitioner's dismissal from employment was unjustified
and illegal. We agree with the complainant that the questioned poster cannot be interpreted as an
act of vandalism. The affidavit is not sufficient to establish complainant's guilt of vandalism. The
complainant likewise justified his action in relation to his act of watching video films. We must
also stress that, even on the assumption that Gutierrez in fact committed the cited infractions, in
our view they are only minor ones which do not merit the supreme penalty of dismissal from
employment. The penalty imposed on the erring employee ought to be proportionate to the
offense, taking into account its nature and surrounding circumstances. In the application of labor
laws, the courts and other agencies of the government are guided by the social justice mandate in
our fundamental law. To be lawful, the cause for termination must be a serious and grave
malfeasance to justify the deprivation of a means of livelihood. This is merely in keeping with the
spirit of our Constitution and laws which lean over backwards in favor of the working class, and
mandate that every doubt must be resolved in their favor.
CONSTRUCTIVE DISMISSAL:
FERNANDO GO vs. COURT OF APPEALS and MOLDEX PRODUCTS, INC.

[G.R. No. 158922. May 28, 2004.]
FACTS: Petitioner Moldex Products, Inc. hired private respondent, Fernando Go as a salesman.
Over the years, private respondent worked himself within petitioner's corporate structure until he
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eventually attained the rank of Senior Sales Manager. It appears that the accounts handled by the
petitioner and his staff experienced collection problems. This difficulty in collection necessitated
the conduct of an investigation by the respondent, which led to the discovery of anomalies. Among
the sales personnel investigated was a member of petitioner's division. Consequently, respondent
corporation dismissed a number of its personnel.
Respondent claimed that it also questioned petitioner and that "obviously feeling guilty for
not exercising effective supervision over his subordinates, he submitted a letter of resignation.
While on leave, petitioner worked for the release of his clearance and the payment of 13th month
pay and leave pay benefits. On the other hand, petitioner averred that he was not investigated.
Petitioner further alleged that after the investigation, he was surprised to receive an advice from
the respondent that his services were being terminated by the latter on account of command
responsibility. But since the petitioner was not involved in the anomalies, he was promised
payment of separation pay, commission and other benefits due him on account of his long and
dedicated employment with the respondent. In addition, the respondent also granted to petitioner
a distributorship agreement for the right to be a distributor of its products. In exchange, petitioner
was asked to submit a courtesy resignation to the respondent. Thereafter, petitioner's
responsibility as the senior sales manager of the respondent was eventually stripped from him.
Petitioner filed with the NLRC a complaint for constructive dismissal, separation pay,
service incentive leave including damages and attorney's fees against the respondent. Labor
Arbiter Abrasaldo-Cuyuca rendered in favor of the complainant and against the respondent. The
NLRC affirmed with modification the Labor Arbiter's decision. As modified, the NLRC deleted the
award of attorney's fees for lack of factual basis but it affirmed the rest of the Labor Arbiter's
award in favor of herein petitioner. Respondent sought a reconsideration of the NLRC decision
which was denied. Respondent filed a petition for certiorari with the Court of Appeals which
annulled and set aside the twin resolutions of the NLRC.
ISSUE: Whether or not petitioner was constructively dismissed rather he voluntarily resigned from
the respondent.
HELD: After a careful review of the records of this case, we find sufficient reasons to uphold
respondent's contention. Constructive dismissal exists where there is a cessation of work because
continued employment is rendered impossible, unreasonable or unlikely. It is present when an
employee's functions, which were originally supervisory in nature, were reduced, and such
reduction is not grounded on valid grounds such as genuine business necessity.
It should be remembered that the petitioner has submitted a letter of resignation. It is thus
incumbent upon him to substantiate his claim that his resignation was not voluntary but in truth
was actually a constructive dismissal. The failure of the petitioner to fully substantiate his claim
that the respondent stripped him of his duties and functions is fatal to his present petition. Except
for the sworn statements previously discussed, which we have found to be lacking in probative
value, petitioner did not present any other proof of the alleged stripping of his functions by the
respondent. Petitioner's bare allegations of constructive dismissal, when uncorroborated by the
evidence on record, cannot be given credence. The totality of the evidence indubitably shows that
petitioner resigned from employment without any coercion or compulsion from respondent. His
resignation was voluntary. As such, he shall only be entitled to his 13th month pay and leave pay
benefits. These, however, have already been paid to him by respondent.
CLOSURE OF ESTABLISHMENT
JOSEFINA A. CAMA, et. Al. vs. JONI’S FOOD SERVICES, INC.

[G.R. No. 153021. March 10, 2004]
QUISUMBING, J.:

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FACTS: Respondent Joni’s Food Services, Inc. is engaged in the coffee shop and restaurant
business, with several branches or outlets. Co-respondent Jose Antonio Feliciano is its president
and general manager. Petitioners were employees of JFSI having been hired on various dates. JFSI
had eight (8) outlets however, it shut down three of these shops to avert serious business losses.
JFSI operations in the red. As a result, JFSI shut down more outlets, leaving it with just three
operating outlets. The remaining branches were also closed. One month before the target closure
date of its remaining outlets, JFSI sent notices of closure to the Department of Labor and
Employment (DOLE) and to the complainants who were then employed in the remaining branches or
outlets.
The petitioners, except Prima P. Santiano, filed a complaint for illegal dismissal, separation
pay, service incentive leave pay, 13th month pay, attorney’s fees, remittance of SSS and Pag-Ibig
contributions, and refund of excess withholding taxes against JFSI. Petitioner Santiano filed her
separate complaint charging JFSI with violations similar to those aired by her co-petitioners.
Santiano’s separate complaint and was consolidated with NLRC-NCR. Following failed attempts to
reach an amicable settlement between complainants and respondents, formal hearings ensued
before the Labor Arbiter.
The NLRC declared respondent Joni’s Food Services, Inc. (JFSI) not guilty of illegal dismissal
as above-discussed. However, the NLRC held the petitioners entitled to separation pay, the Labor
Arbiter opined that petitioners were retrenched as a result of the closure of the respondent’s
coffee shop operations and/or to prevent losses, and hence, fell squarely within the coverage of
Article 283 of the Labor Code. Aggrieved, respondents appealed to the NLRC raising the issue of
whether the complainants below were entitled to the monetary award decreed by the Labor
Arbiter. The decision appealed from was affirmed with the modification deleting the award for
attorney’s fees. Respondent company, JFSI, then moved for reconsideration, but this was denied
by the NLRC in its resolution. Hence, it filed a special civil action for certiorari with the Court of
Appeals, on the ground that the NLRC committed grave abuse of discretion amounting to lack or
excess of jurisdiction by incorrectly applying Article 283 of the Labor Code.
The Court of Appeals granted the writ of certiorari prayed for by JFSI. The petitioners
seasonably moved for reconsideration, but the appellate court denied the motion in its resolution.
Hence, the instant case.
ISSUE: Whether or not the termination of petitioners’ employment due to serious business losses
suffered by JFSI precluded payment of separation pay.
HELD: Respondents assert that the company was taking losses of such magnitude which left its
survival or future existence in the dark. To stem these serious losses, the company found no
recourse but to shut down its outlets. Thus, as found by the Court of Appeals, respondents had no
option but to lay off employees and eventually close shop.
The Constitution, while affording full protection to labor, nonetheless, recognizes “the
right of enterprises to reasonable returns on investments, and to expansion and growth.” In line
with this protection afforded to business by the fundamental law, Article 283 of the Labor Code
clearly makes a policy distinction. It is only in instances of “retrenchment to prevent losses and in
cases of closures or cessation of operations of establishment or undertaking not due to serious
business losses or financial reverses” that employees whose employment has been terminated as a
result are entitled to separation pay. In other words, Article 283 of the Labor Code does not
obligate an employer to pay separation benefits when the closure is due to serious losses. To
require an employer to be generous when it is no longer in a position to do so, in our view, would
be unduly oppressive, unjust, and unfair to the employer. Ours is a system of laws, and the law in
protecting the rights of the working man, authorizes neither the oppression nor the self-destruction
of the employer.
CLOSURE OF ESTABLISHMENT AND REDUCTION OF PESONNEL.

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MAC ADAMS METAL ENGINEERING WORKERS UNION-INDEPENDENT
vs. MAC ADAMS METAL ENGINEERING
[G.R. No. 141615. October 24, 2003.]
CORONA, J.:
FACTS: The present controversy stemmed from two separate complaints: the first complaint, filed
by petitioner MAMEWU and its president, petitioner Mario A. Garcia, for and in behalf of 29 other
petitioners, charged private respondents MAME and GBS with unfair labor practices (ULP)
committed through union busting and illegal closure, and illegal dismissal. The second complaint,
filed by the last eight petitioners led by Halim Roldan, alleged that aside from ULP and illegal
dismissal, private respondents were likewise liable for non-payment of premium pay for holidays
and rest days, night differential pay and 13th month pay.
Insisting that the closure of MAME and GBS was illegal as it was calculated to bust their
union, petitioners claimed that MAME and GBS continued doing business under new business names,
i.e., MBS Machine and Industrial Supply (MBS) and MVS Heavy Equipment Rental and Builders (MVS).
Thus, MBS and MVS were impleaded as respondents in the complaint for allegedly being run-away
shops of MAME and GBS. In both complaints, petitioners prayed for alternative reliefs for
reinstatement with backwages and/or separation pay.
In their answer, private respondent spouses Geronimo and Lydia V. Sison, proprietors of
GBS and MAME respectively, denied petitioners' allegations. Respondent Lydia V. Sison decided to
retire from business when she became sickly in 1988. Her health did not improve despite proper
medical attention. In the general meeting of the workers she announced her plan to close shop.
The announcement in advance was intended to give the workers ample time to look for alternative
employment. Accordingly, she declined to accept new projects and proceeded with the winding up
of her business.
After the workers' general meeting, some employees formed a union ostensibly for the
purpose of making representations with the management to reconsider its decision to cease
business operations or, at least, see to it that all benefits due the affected employees would be
paid. In the course of negotiations with the management, the union leadership demanded
separation pay computed at 45 days for every year of service, a proposal private respondents
rejected. As it turned out, even before respondent Lydia V. Sison could formally notify the
employees and the concerned government agencies of the intended closure and cessation of her
business, MAMEWU and its members started resorting to concerted activities such as work
slowdown, picketing, refusal to report for work and ultimately, strikes. Meanwhile, the workers of
GBS joined in the concerted activities in sympathy with the striking employees of MAME. As a
consequence, GBS was also forced to close and cease its business operations. For their part, MBS
and MVS denied being run-away shops of MAME and GBS.
The labor arbiter rendered a decision declaring that the closure of business of MAME and
GBS was legitimate, having been done in good faith and in accordance with law. Hence, no unfair
labor practice or illegal dismissal was committed. On appeal to the NLRC, the assailed decision of
the labor arbiter was affirmed. Aggrieved, petitioners filed a petition for review before the Court
of Appeals questioning the decision of the NLRC. The Court of Appeals rendered a decision
affirming the findings of both the labor arbiter and the NLRC that there was a legitimate and bona
fide closure and cessation of business by MAME and GBS. The appellate court, however, modified
the assailed decision and declared the second group of petitioners, led by Halim Roldan, as regular
employees also entitled to separation pay. Hence the petition.
ISSUE: Whether the closure of private respondents' business was done in good faith and for
legitimate business reasons.
HELD: Yes. Explicit from Article 283 of the Labor Code is that closure or cessation of business
operations is allowed even if the business is not undergoing economic losses. The owner, for any
bona fide reason, can lawfully close shop at anytime. Just as no law forces anyone to go into
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business, no law can compel anybody to continue in it. It would indeed be stretching the intent and
spirit of the law if SC were to unjustly interfere with the management's prerogative to close or
cease its business operations, just because said business operation or undertaking is not suffering
from any loss or simply to provide the workers continued employment.
The employer need only comply with the following requirements for a valid cessation of
business operations: (a) service of a written notice to the employees and to the DOLE at least one
month before the intended date thereof; (b) the cessation of or withdrawal from business
operations must be bona fide in character and (c) payment of termination pay equivalent to at
least one-half month pay for each year of service, or one month pay, whichever is higher. The
records reveal that private respondents complied with the requirements.
Finally, since private respondents' cessation and closure of business was lawful, there was
no illegal dismissal to speak of. This fact negated the obligation to pay backwages. Instead private
respondents were required to give separation pay, which they already did, to all their regular
employees except petitioners Rolando Cortes, Herminigildo Justo, Guillermo Macaraeg, Felixberto
Mirana, Arsenio Ortiz, Manuel Pranada, Ruben Saringan and Ramon Seraspi who refused to accept
their separation pay.
RETRENCHMENT; VALID CAUSES
EMCO PLYWOOD CORPORATION vs. PERFERIO ABELGAS et. al.

[G.R. No. 148532. April 14, 2004.]
PANGANIBAN, J.:
FACTS: EMCO is a domestic corporation engaged in the business of wood processing, operating
through its sawmill and plymill sections where respondents used to be assigned as regular workers.
EMCO, represented by Lim, informed the DOLE of its intention to retrench some of its workers. The
intended retrenchment was grounded on purported financial difficulties occasioned by alleged lack
of raw materials, frequent machinery breakdown, low market demand and expiration of permit to
operate its sawmill department. A memorandum was thereafter issued by EMCO, addressed to all
its foremen, section heads, supervisors and department heads.
The Labor Arbiter dismissed the claim of the respondent employees. The NLRC affirmed the
decision of the Labor Arbiter. The respondents then filed Petition for Certiorari under Rule 65 with
the Court of Appeals. The CA held that the evidence was insufficient to justify a ruling in favor of
EMCO, which had not complied with the one-month prior notice requirement under the Labor Code.
The appellate court added that the corporation had not served on the employees the required
notice of termination.
The CA also held that before EMCO resorted to retrenchment, the latter had failed to
adduce evidence of its losses and to prove that it had undertaken measures to prevent the
occurrence of its alleged actual or impending losses. All in all, the appellate court concluded that
the retrenchment was illegal, because of EMCO's failure to comply with the legal requirements.
Hence, this Petition.
ISSUES:
1. Whether or not, the retrenchment was valid and proper;
2. Whether or not, the quitclaim is proper.
HELD:
(1) Retrenchment is one of the authorized causes for the dismissal of employees. Resorted
to by employers to avoid or minimize business losses, it is recognized under Article 283 of the
Labor Code. Not every loss incurred or expected to be incurred by a company will justify
retrenchment. The losses must be substantial and the retrenchment must be reasonably necessary
to avert such losses. The employer bears the burden of proving the existence or the imminence of
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substantial losses with clear and satisfactory evidence that there are legitimate business reasons
justifying a retrenchment. Should the employer fail to do so, the dismissal shall be deemed
unjustified.
Retrenchment is a management prerogative consistently recognized and affirmed by this

Court. It is, however, subject to faithful compliance with the substantive and the procedural
requirements laid down by law and jurisprudence. It must be exercised essentially as a measure of
last resort, after less drastic means have been tried and found wanting.
(2) Since the retrenchment was illegal and of no effect, the Quitclaims were therefore not
voluntarily entered into by respondents. Their consent was similarly vitiated by mistake or fraud.
The law looks with disfavor upon quitclaims and releases by employees pressured into signing by
unscrupulous employers minded to evade legal responsibilities. As a rule, deeds of release or
quitclaim cannot bar employees from demanding benefits to which they are legally entitled or from
contesting the legality of their dismissal. The acceptance of those benefits would not amount to
estoppel.
JUDICIAL REVIEW OF LABOR CASES
CBL TRANSIT, INC. vs. NATIONAL LABOR RELATIONS COMMISSION

[G.R. No. 128425. March 11, 2004]
CORONA, J.:
FACTS: Private respondents were regular employees hired as drivers and conductors/conductresses
by petitioner CBL Transit, Inc./California Bus Line, Inc. However, despite their regular employment
status, they were not given work assignments beginning December 1990. They also averred that CBL
Transit, Inc. and California Bus Lines, Inc. were, in reality, a single enterprise owned and operated
by one and the same family. A complaint for illegal dismissal was filed by herein respondents at the
Department of Labor and Employment (DOLE), NLRC, National Capital Region.
On the other hand, petitioner CBL Transit, Inc. categorically denied the allegations of the
private respondents. It claimed that the termination of private respondents was a consequence of
its closure of operations due to bankruptcy.
Labor arbiter Cresencio R. Iniego found petitioner guilty of illegal dismissal. Consequently,
petitioner and its directors/stockholders were ordered to pay private respondents separation pay
equivalent to one-month salary for every year of service. On appeal, the NLRC upheld the decision
of the labor arbiter. It rejected petitioner’s claim that it was forced to close shop due to
bankruptcy. Petitioner filed a petition for certiorari before the Supreme Court. However, in a
resolution the Supreme Court dismissed the petition and ordered the reinstatement of private
respondents with backwages up to the time of their actual reinstatement, or separation pay in the
amount of one month for every year of service in case reinstatement was not feasible.
To enforce the Court’s resolution, labor arbiter Iniego directed Atienza of the Research and
Information Unit to call for a conference with the parties in order to determine the individual
money claims of private respondents. Subsequently, Mr. Atienza submitted a report consisting of
the computation of private respondents’ respective monetary awards. Since the actual payrolls
were not available, the computation, per agreement of both parties, was based on the monthly
average earnings of the individual private respondents appearing on their Social Security System
(SSS) forms.
Unconvinced, petitioner again filed its comment, this time submitting its own formula and
pertinent figures. As the matter remained unsettled, both parties agreed to meet again. This time,
however, petitioner’s accountant failed to appear and instead filed a manifestation and motion
assailing the computation and authority of Ricardo Atienza. In a pleading filed by respondent, it
alleged that the computation made by the Acting Chief, Research and Information Unit of this
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Office, was not based on what was agreed upon by the parties, and is favorable to the
complainants. Petitioner appealed to the NLRC but the appeal was dismissed for lack of merit. The
motion for reconsideration was likewise denied. Hence, this petition.
ISSUES:
1. Whether or not private respondents are entitled to separation pay;
2. Whether or not petitioner ceased operations because of bankruptcy.
HELD:
(1) Petitioner’s contention that the NLRC acted with grave abuse of discretion when it
sustained the labor arbiter’s order awarding backwages and separation pay to private respondents
is devoid of merit. It should be pointed out that, due to the unavailability of the actual payrolls,
the parties themselves agreed on the basis for the computation of the respective award of
backwages and separation pay ¾ the monthly average earnings of the individual private
respondents appearing on their SSS forms for the years 1988, 1989, and 1990. The only difference
was in the manner of computation thereof. This issue is definitely a question of fact, the
determination of which is the statutory function of the NLRC. Judicial review of labor cases does
not go beyond the evaluation of the sufficiency of the evidence upon which its labor officials’
findings rest. As such, the findings of facts and conclusion of the NLRC are generally accorded not
only great weight and respect but even clothed with finality and deemed binding on this Court as
long as they are supported by substantial evidence. We find no basis for deviating from the
aforestated doctrine without any clear showing that the findings of the labor arbiter, as affirmed
by public respondent NLRC, are bereft of sufficient substantiation.
Petitioner submitted itself to the jurisdiction of the Research and Information Unit of the
NLRC. Through its authorized accountant, petitioner agreed that the computation of backwages and
separation pay should be based on the monthly average earnings of the individual private
respondents appearing on their SSS forms for 1988-1990, considering that the payrolls were no
longer available. It cannot now be allowed to question the latter’s jurisdiction.
(2) There is no dispute that the cessation of operations of an establishment due to serious
business losses is a just cause for terminating the services of employees. In such a situation, it
would be unfair, and useless, to hold an employer who is bankrupt, liable for separation pay.
However, the law is clear that the burden of proving that the termination was for a valid or
authorized cause rests on the employer (Article 277, Labor Code). In other words, the fact of
serious business reverses or financial losses and the consequent closure of the establishment must
be sufficiently shown by the employer.
We agree that petitioner has failed to discharge the burden of proof resting on it. Simply
asserting a state of insolvency is not enough to show serious financial losses. The petitioners did not
even bother to give notice to the DOLE and to its employees that it was closing its business due to
serious financial reverses as required by Article 283 of the Labor Code.
BACKWAGES
PHIL. JOURNALISTS, INC. vs. MICHAEL MOSQUEDA

[G.R. No. 141430 May 7, 2004]
FACTS: Philippine Journalists, Inc. (PJI), petitioner, was sequestered by the Presidential
Commission on Good Government (PCGG) and it was placed under the management of PCGG,
through its nominees to the Board of Directors. However, Rosario Olivares, who owns 20% or 1,000
common shares, attempted to regain control of the PJI management. During a stockholders'
meeting, and designated Michael Mosqueda, respondent, as Chairman of a Task Force, along with

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five (5) other members, to protect the properties, funds and assets of PJI and enforce or
implement directives, instructions and orders of the Olivares group.
Abraham J. Buenaluz, Officer-in-charge of PJI's Administrative Services Division, issued a

memorandum to respondent charging them with "serious misconduct prejudicial to the interest of
the company and/or present management;xxx and to explain twenty four hours after notice.
Respondent submitted his explanation the next day. They were placed under preventive suspension
pending the investigation. Prior to the investigation, the Journal Employees Union (Union), for and
in behalf of respondent and other members, filed with the Labor Arbiter a complaint for illegal
suspension, unfair labor practice, and damages against petitioner.
Respondent failed to appear clarificatory hearing despite notice and also failed to present
evidence. Petitioner terminated the services of respondent and the other members of the Task
Force. The union filed with the Labor Arbiter a complaint for illegal dismissal, unfair labor
practices and damages. The Labor Arbiter rendered a decision holding that respondent and the
other five employees were illegally dismissed from employment and ordered for their
reinstatement and payment of backwages and moral and exemplary damages. On appeal, NLRC
deleted the award of backwages, damages and attorney's fees. The motions for reconsideration
filed were denied.
Respondent filed with the Court of Appeals a petition for certiorari assailing, as grave abuse
of discretion, the NLRC's deletion of the award of backwages, damages and attorney's fees. The
Court of Appeals granted the petition and reinstated the Arbiter's award of backwages. A motion
for reconsideration was filed, but was denied.
ISSUE: Whether or not, the award of backwages in favor of respondent is proper.
HELD: Yes. Under Art. 279 of the Labor Code, an employee who is unjustly dismissed is entitled to
reinstatement, without loss of seniority rights and other privileges, and to the payment of his full
backwages, inclusive of allowances, and other benefits or their monetary equivalent, computed
from the time his compensation was withheld from him (which, as a rule, is from the time of his
illegal dismissal) up to the time of his actual reinstatement.
Similarly, under R.A. 6715, employees who are illegally dismissed are entitled to full
backwages, inclusive of allowances and other benefits or their monetary equivalent, computed
from the time their actual compensation was withheld from them up to the time of their actual
reinstatement. If reinstatement is no longer possible, the backwages shall be computed from the
time of their illegal termination up to the finality of the decision.
RECKONING POINT FOR PAYMENT OF BACKWAGES.
ROBERTO FULGENCIO vs. NATIONAL LABOR RELATIONS COMMISSION

[G.R. No. 141600. September 12, 2003.]
CALLEJO, SR., J.:

FACTS: This is a petition for review on certiorari filed under Rule 45 of the 1997 Rules of Civil
Procedure, assailing the Resolution of the Court of Appeals (CA) in CA-G.R. SP No. 54641 which
dismissed outright the petitioners' petition for certiorari for alleged failure to comply with the
formal requirements of the rules, and its January 18, 2000 Resolution denying the petitioners'
motion for reconsideration.
The private respondent Raycor Aircontrol Systems, Inc. was engaged in the installation of
airconditioning systems in the buildings of its clients. In connection with such installation work,
petitioners were among those hired by the private respondent to work in various capacities, such as
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tinsmith, leadsman, aircon mechanic, installer, welder and painter. The private respondent served
the petitioners with uniformly worded notices of termination of employment. As a result, the
petitioners joined other employees in filing three separate cases of illegal dismissal against the
private respondent, docketed as NLRC-NCR Nos. 00-03-01930-92, 00-05-02789-92 and 00-07-03699-
92. The proceedings in all the cases were subsequently consolidated.
The Labor Arbiter rendered judgment dismissing the complaints for lack of merit. On
appeal, the National Labor Relations Commission (NLRC) reversed the labor arbiter's findings. The
private respondent's motion for reconsideration having been denied by the NLRC, the private
respondent filed a petition for certiorari assailing the above-quoted decision with the Supreme
Court which rendered judgment holding that petitioner has failed to discharge its burden of proof
in the instant case and therefore ordering the reinstatement of private respondents as regular
employees of petitioner, without loss of seniority rights and privileges and with payment of
backwages from the day they were dismissed up to the time they are actually reinstated.
The judgment of the court became final and executory. The private respondent filed a
motion for clarification claiming that it had offered reinstatement to the petitioners but that the
latter spurned its offer. The Court denied the said motion. The case was remanded to the NLRC for
implementation. In due course, the Research and Information Unit of the NLRC computed the
benefits due the petitioners and submitted an updated computation. The Labor Arbiter approved
the computation. Meanwhile, on motion of the petitioners, a writ of execution was issued by the
Labor Arbiter directing the sheriff of the NLRC to accompany complainants to the premises of
respondent for the purpose of reinstating them to their former position and collect from said
respondent the amount of P3,960,668.45 corresponding to complainants' backwages and attorney's
lien.
The private respondent appealed the Order of the Labor Arbiter to the NLRC which
awarded backwages of the complainant and such will not be reduced by their salaries obtained
elsewhere during the period of their dismissal until the offer of reinstatement was made. The
petitioners filed a motion for the reconsideration of the above-quoted decision, contending that by
computing the backwages of the petitioners the NLRC modified the already final and executory
decision of the Supreme Court. The NLRC issued an order denying the said motion. The petitioners
filed a petition for certiorari with a prayer for the issuance of a writ of preliminary injunction with
the CA which outrightly dismissed the petition in a Resolution.
ISSUE: Whether or not petitioners are entitled to payment of backwages from the time they were
illegally dismissed up to the time of their actual reinstatement.
HELD: The Supreme Court gave due course to the petition to avert a miscarriage of justice on
account of technicalities. The court has the discretion to dismiss or not to dismiss an appellant's
appeal. In this case, the Court finds compelling reasons to disregard the petitioners' procedural
lapses in order to obviate a patent injustice and to avert further delay.
The Supreme Court was convinced beyond cavil that the NLRC committed a grave abuse of
its discretion amounting to lack or excess of jurisdiction in reversing the order of the Labor Arbiter,
for in so doing, the NLRC modified the decision of this Court in Raycor Aircontrol Systems, Inc. v.
NLRC. It bears stressing that in our decision in G.R. No. 114290, we specifically enjoined the
petitioners' reinstatement coupled with the payment of backwages, from the time of their dismissal
up to the time of their actual reinstatement. However, the NLRC, in its assailed June 16, 1998
Decision, directed the payment of the petitioners' backwages from the time of dismissal up to July
13, 1992, thus sustaining the claim of the private respondent that when the petitioners were
directed to return to work on the said date, they refused. In so doing, the NLRC sought to enforce
the final judgment in G.R. No. 114290 in a manner contrary to the explicit terms thereof. We note
that in its Decision dated June 16, 1998, the NLRC reversed the Labor Arbiter's dismissal of the case
and directed the payment of backwages, to be reckoned from the time of the petitioners' dismissal
up to the time of their actual reinstatement. If the private respondent believed the aforesaid
computation to be erroneous in the light of the factual circumstances obtaining between the
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parties, it should have assigned the same as an error when it filed its petition for certiorari in G.R.
No. 114290 assailing the said NLRC judgment.
It is, therefore, crystal-clear that the manner of the computation of the petitioners'
backwages is an issue which was already resolved by this Court in its decision in G.R. No. 114290
which had long acquired finality. Hence, the Court's decision in G.R. No. 114290, which directed
the payment of the petitioners' backwages from the time they were dismissed up to the time they
are actually reinstated, has become the "law of the case" which now binds the NLRC and the private
respondent.
RECKONING POINT FOR PAYMENT OF BACKWAGES
JOSE B. CRUZ vs. PHILIPPINE GLOBAL COMMUNICATIONS, INC. AND/OR ALFREDO PARUNGAO,
[G.R. No. 141868. May 28, 2004.]
SANDOVAL-GUTIERREZ, J p:
FACTS: Philippine Global Communications, Inc., respondent, is a corporation engaged in the
principal business of communications through telex and telegram, with various branches
nationwide. As a result of a decline in the volume of recorded messages sent via telex and
telegram, respondent suffered substantial financial losses. With this development, respondent
adopted an organizational streamlining program that resulted in the closure of its branches and
termination from the service of forty-two (42) workers. Among them were Jose B. Cruz, Rodolfo C.
Delos Santos, Vicente A. Rigos, Gregorio A. Lingal and Olivia P. Francisco, petitioners, who
occupied managerial, supervisory and confidential positions.
Eventually, respondent paid petitioners their separation pay at the rate of 1 ½ months
salary per year of service. Then after having been paid their separation pay, they executed and
signed a “Release, Waiver and Quitclaim.” However, on October 17, 1995, petitioners filed with
the Labor Arbiter a complaint for payment of retirement benefits, damages and attorney’s fees
against respondent and its president, Alfredo Parungao. On July 31, 1997, the Labor Arbiter
rendered a Decision sustaining petitioners’ claim for retirement benefits under respondent’s
Retirement Plan. Upon appeal by the parties, the National Labor Relations Commission (NLRC), in a
Decision dated March 2, 1998, reversed the Labor Arbiter’s Decision and dismissed petitioners’
complaint for payment of retirement benefits.
On March 23, 1998, petitioners filed a motion for reconsideration but was denied. Hence,
petitioners filed with this Court a petition for certiorari which we referred to the Court of Appeals
pursuant to our ruling in St. Martin’s Funeral Home vs. NLRC. On July 30, 1999, the Appellate Court
promulgated its Decision affirming the assailed Decision of the NLRC. In denying petitioners’ claim
for retirement benefits. On February 4, 2000, the Court of Appeals issued a Resolution denying
petitioners’ motion for reconsideration.
ISSUE: Whether or not employee separated from the service is entitled to either the amount
prescribed in the retirement plan or the separation pay provided by law, whichever is higher.
HELD: In Cipriano case, this Court, through Mr. Chief Justice Concepcion, ruled that regular
employees who were separated from the service are entitled either to the amount prescribed in
the retirement plan or the separation pay provided by law, whichever is higher. This is pursuant to
the agreement between the company and the labor union, of which plaintiff is a member, thus:
“Plaintiff's contention is manifestly devoid of merit. His right to the benefits of the aforementioned
plan came into existence by virtue of the agreement between the defendant and the labor union,
of which plaintiff is a member. Admittedly, said right is subject to the limitations prescribed in the
agreement, Article X of which reads: ‘Regular employees who are separated from the service of the
company for any reason other than misconduct or voluntary resignation shall be entitled to either
100% of the benefits provided in Section 2, Article VIII hereof, regardless of their length of service
in the company or to the severance pay provided by law, which ever is the greater amount.’
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Pursuant thereto, plaintiff was entitled to ‘either’ the amount prescribed in the plan or the
severance pay provided by law, whichever is the greater amount.’ In other words, he had a right to
one of the two benefits, not to both, at the same time. The exclusion of one by the other is clearly
deducible, not only from the terms ‘either’ and ‘or’ used in the agreement, but, also, by the
qualifying phrase ‘whichever is the greater amount.’ . . ..”
Clearly, under the above case, the right of the concerned employees to receive both
retirement benefits and separation pay depends upon the provisions in the Retirement Plan. Thus,
petitioners are entitled only to either the separation pay provided under Article 283 of the Labor
Code, as amended, or retirement benefits prescribed by the Retirement Plan, whichever is higher.
Under Article 283 of the Labor Code, as amended, affected employees, in case of
retrenchment or cessation of operations, are always given termination or separation pay equivalent
to one month pay or at least ½ month pay for every year of service, whichever is higher. Under
Section 4, Article VI 12 of respondent’s Retirement Plan, the employees are entitled to a
retirement pay equivalent to one and a half (1 ½) months pay for every year of service computed
on the basis of their basic monthly salary at the time of retirement. Here, respondent opted to pay
petitioners separation benefits computed under the Retirement Plan, the same being higher than
what Article 283 of the Labor Code, as amended, provides.
ILLEGAL DISMISSAL; BACK WAGES
JACINTO RETUYA vs. DUMARPA

[G.R. No. 148848 August 5, 2003]
PANGANIBAN, J.:
FACTS: Petitioners were workers who have rendered services in various corporations of private
respondents, namely Mindanao Integrated Builders, Inc., Sta. Clara Plywood, Inc., Insular Builders,
Inc. and Queen City Builders, Inc. Private respondent, Insular Builders, Inc. engaged in the
construction business, on the other hand, is a family-owned corporation managed and operated
principally by Antonio Murillo, father, and his son, Rodolfo Murillo. At the height of the feud
between private respondents Antonio Murillo and Rodolfo Murillo, the former discharged the latter
from his position as manager of Insular Builders, Inc. and assumed control of the company.
Petitioners found themselves in the middle of the crossfire and were told to temporarily stop
working. Later, private respondent Antonio Murillo dismissed petitioners and reported the matter
to the DOLE. Petitioners were however made to continue their work, rendering the same services,
in the same place, locality and at the same office but under a different company, the Queen City
Builders, Inc., managed and controlled by private respondent Rodolfo Murillo.
Petitioners filed with the NLRC, a complaint for illegal dismissal, non-payment of wages,
13th month pay, and retirement pay. Petitioners averred that they were terminated from
employment without prior notice and also in absence of any valid cause. They alleged that their
termination was an off-shoot of the supposed personal rift and disagreements between private
respondents Antonio Murillo and Rodolfo Murillo.
On the other hand, Antonio Murillo and Insular Builders, Inc. counter that petitioners were
not illegally dismissed from employment, because there was no cessation of work when they were
transferred from Insular Builders, Inc. to Queen City Builders, Inc. Labor Arbiter rendered a
Decision finding private respondents guilty of illegal dismissal. The NLRC of denied their appeal and
affirmed the labor arbiter's Decision in toto. On reconsideration, however, the NLRC (Fifth
Division) set aside its earlier decision then remanded the case to the labor arbiter for further
proceedings.

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Both parties appealed to the NLRC which reversed and set aside the labor arbiter's ruling.
The Court of Appeals reversed the NLRC and upheld the Decision of the labor arbiter. Moreover, the
appellate court held that Rodolfo Murillo had incurred no liability. That no employer-employee
relationship existed between him and petitioners was shown by the fact that, as manager of Insular
Builders, Inc., since he had likewise been dismissed from employment by the elder Murillo.
Petitioners contend that because the CA reinstated the labor arbiter's finding of illegal dismissal, it
should not have reduced the amount of their separation pay, but should have instead awarded
them full back wages in accordance with Article 279 of the Labor Code.
ISSUES:
1. Whether or not, petitioners are entitled to full back wages and separation pay in
accordance with Article 279 of the Labor Code;
2. Whether or not, there exists an employer-employee relationship that existed between
the petitioners and Rodolfo Murillo.
HELD:
(1) The Supreme Court in Bustamante v. NLRC, held that illegally dismissed employees
were entitled to full back wages that should not be diminished or reduced by the amount they had
earned from another employment during the period of their illegal dismissal. While litigating,
employees must still earn a living. Furthermore, as penalty for their illegal dismissal, their
employers must pay them full back wages. This rule has been uniformly applied in subsequent
cases.
In the present case, petitioners were dismissed because of a "change of management." They
were not given any prior written notice, but simply told that their services were terminated on the
day they stopped working for Insular Builders, Inc. Under the circumstances, the CA was correct in
upholding the labor arbiter's finding that they had been illegally dismissed. Having been illegally
dismissed, petitioners should be awarded back wages. The fact that they worked for a sister
company immediately after being dismissed from Insular Builders, Inc. should not preclude such
award.
Therefore, in accordance with R.A. No. 6715, petitioners are entitled to their full
backwages, inclusive of allowances and other benefits or their monetary equivalent, from the time
their actual compensation was withheld from them up to the time of their actual reinstatement.
(2) Rodolfo Murillo was not the employer of petitioners when they were dismissed from
Insular Builders, Inc. It was not he but Antonio Murillo who dismissed them, as evidenced by the
Dismissal Report submitted to the DOLE. In fact, Rodolfo himself was dismissed together with them,
hence, there was no employer-employee relationship that existed between the petitioners and
Rodolfo Murillo.
SPECIAL LAWS
PD 626; DEATH BENEFITS
GSIS vs. TEODOSIO CUANANG

G.R. No. 158846. June 3, 2004
FACTS: Carmen T. Cuanang, deceased wife of respondent Marc Dennis Cuanang, was formerly
employed as an Elementary Grade Teacher. She was promoted to Teacher I and later to Teacher II.
She applied for early optional retirement after completing almost twenty six years of government
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service. Cuanang was confined at the University of the East Ramon Magsaysay Memorial Medical
Center, for Bronchial Asthma and Pneumonia, Rheumatic Heart Disease (RHD) and Mitral Stenosis.
Cuanang died at the age of 65. The immediate cause of her death was determined to be Cardio
Pulmonary Arrest with Acute Myocardial Infarction as the antecedent cause, and Bronchial Asthma
and Hypertension as underlying causes. Respondent filed with petitioner GSIS a claim for death
benefits under PD 626, as amended. Petitioner denied the claim as the death occurred out of
service. On appeal to the ECC, the commission affirmed GSIS. They later filed with the Court of
Appeals a petition for review under Rule 43 of the Rules of Court. CA reversed the decision of ECC
and GSIS.
ISSUE: Whether or not, death benefits should be paid although it occurred after separation from
government service.
HELD: Yes. We hold in the affirmative. In the instant case, the wife of the respondent died a year
after her retirement. Clearly, the period between her retirement and demise was less than one
year. A claim for benefit for such death cannot be defeated by the mere fact of separation from
service. Hence, the degree of proof required under PD 626 was satisfied, i.e., "such relevant
evidence as a reasonable mind might accept as adequate to support a conclusion." Probability and
not ultimate degree of certainty is the test of proof in compensation proceedings.
In the case at bar, the requisite substantial evidence came from the expert opinion of Dr.
Arsenio A. Estreras Jr., a Diplomate in Internal Medicine who issued the Death Certificate. Acute
Myocardial Infarction generally occurs with the abrupt decrease in coronary blood flow that follows
a thrombotic occlusion of a coronary artery previously narrowed by astherosclerosis. It is common
knowledge among medical practitioners that hypertension is one major risk factor among multiple
coronary risk factors that can precipitate an acute coronary acclusion. Cuanang was hypertensive
and also had bronchial asthma. Therefore Acute Myocardial Infarction which she suffered can be a
consequence also of her chronic hypertension vis-à-vis her rheumatic heart disease.
This expert opinion is fully supported by the facts leading to Carmen Cuanang's
deteriorating health condition, and ultimately, her death. When the deceased joined the
government service on October 1, 1972, she was in perfect health. It was only in 1997, while she
was still in the service, that her condition started to worsen. Myocardial Infarction, also known as
coronary occlusion or just a "coronary", is a life threatening condition. Predisposing factors for
myocardial infarction are the same for all forms of Coronary Artery Disease, and these factors
include stress. Stress appears to be associated with elevated blood pressure. It is of common
knowledge that the job of a teacher can be very stressful. It goes without saying that all these
conditions contributed much to the deterioration of her already precarious health.
Therefore, claims falling under the Employees' Compensation Act should be liberally
resolved to fulfill its essence as a social legislation designed to afford relief to the working man and
woman in our society. It is only this kind of interpretation that can give meaning and substance to
the compassionate spirit of the law as embodied in Article 4 of the New Labor Code, which states
that all doubts in the implementation and interpretation of the provisions of the Labor Code
including its implementing rules and regulations should be resolved in favor of labor.
PERMANENT TOTAL DISABILITY
GOVERNMENT SERVICE INSURANCE SYSTEM vs. LEO L. CADIZ

[G.R. No. 154093. July 8, 2003.]
FACTS: Respondent Leo L. Cadiz was appointed as a Provincial Guard of Negros Oriental. He was
absorbed by the Philippine National Police (PNP), with a rank of Police Chief Inspector.
Respondent's rank was adjusted to Police Chief Superintendent, the position he held until his
retirement at the age of 55.
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The medical records of respondent revealed that he suffered a heart attack and was
hospitalized at the San Carlos Planters Hospital, San Carlos City. He was transferred to the Siliman
University Medical Center where he was diagnosed to be suffering from a heart ailment.
Consequently, he applied for early retirement due to "an ailment causing paralysis of the left hand
and slurred speech rendering him unfit to discharge further his duties and responsibilities as a
police officer." After its own examination of respondent, the Medical and Dental Service, PNP,
declared him "UNFIT FOR POLICE SERVICE". Hence, he was retired from service and granted
permanent total disability benefits. Subsequently, respondent filed a disability claim with the GSIS,
attaching to his application his service record and PNP General Order No. 641, stating that
respondent retired from the PNP due to a permanent total disability.
Dr. Estrada, Medical Officer of GSIS, Dumaguete City, approved the claim and granted
respondent permanent total disability benefits and temporary total disability benefits. The Medical
Service Group of GSIS, Pasay City, however, directed Dr. Estrada to revise her recommendation.
Dr. Estrada modified her recommendation by retaining respondent's temporary total disability
benefits but downgrading the permanent total disability benefits to compensation equivalent to 8
months permanent partial disability benefits. Respondent moved for reconsideration of the
evaluation but the same was denied.
On appeal by respondent, the Employees' Compensation Commission (ECC) affirmed the

findings of the GSIS. Hence, respondent filed a petition with the Court of Appeals which, which set
aside the decision of the ECC and granting respondent's claim for permanent total disability. GSIS,
as the agency charged with the management and administration of the trust fund of the ECC, filed
the instant petition.
ISSUE: Whether or not respondent is entitled to permanent total disability benefits.
HELD: We rule in the affirmative. The test of whether or not an employee suffers from permanent
total disability is the capacity of the employee to continue performing his work notwithstanding the
disability he incurred. If by reason of the injury or sickness he sustained, the employee is unable to
perform his customary job for more than 120 days and he does not come within the coverage of
Rule X of the Amended Rules on Employees Compensability (which, in a more detailed manner,
describes what constitutes temporary total disability), then the said employee undoubtedly suffers
from a permanent total disability regardless of whether or not he loses the use of any part of his
body. Permanent total disability does not mean a state of absolute helplessness, but means
disablement of an employee to earn wages in the same kind of work, or work of similar nature, that
he was trained for, or any work which a person of similar mentality and attainment could do.
In the case at bar, respondent's entitlement to permanent total disability was established
by his medical records and by the investigation of the very agency he worked for, the PNP, which
found him "UNFIT FOR POLICE SERVICE". Even the initial findings of Dr. Estrada, Medical Officer of
the GSIS, Dumaguete City evinced that respondent is really qualified for permanent total disability
benefits. Most of all, the decision of the PNP to retire him at the age of 55 for being unfit for police
service is a clear indication that his heart ailment rendered him incapable of effectively and
competently performing his job as a Police Chief Superintendent without serious discomfort or pain
and without material injury or danger to his life. In a number of cases, it was ruled that the early
retirement of an employee due to a work-related ailment, as in the case at bar, proves that he was
really disabled totally to further perform his assigned task, and to deny permanent total disability
benefits when he was forced to retire would render inutile and meaningless the social justice
precept guaranteed by the Constitution.
The case at bar neither concerns a recurring illness previously compensated, nor a claim for
additional/conversion of disability benefits, but involves a review of the ECC decision which
classified respondent's early-retirement-causing disability as permanent partial instead of
permanent total.

CHAIRPERSONS
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REQUISITES OF AGRARIAN TENANCY RELATIONSHIP; PARAB’S JURISDICTION
SPS. NUMERIANO and CARMELITA ROMERO vs. MERCEDES L. TAN

[G.R. No. 147570. February 27, 2004]
QUISUMBING, J.:
FACTS: Petitioners allege that they have been in peaceful possession of the fishpond as tenant-
lessee since 1985. They present cash vouchers and hand-written receipts covering the period 1987
to 1997. In September 1999, respondents gave verbal notice to terminate petitioners’ lease.
According to petitioners, respondents wanted to terminate the contract because a third party
offered to pay higher rent. However, despite petitioners’ counter-offer to match the increase in
the rent, respondents appeared bent on removing petitioners from the premises. For their part,
respondents aver that there is no relationship of lease-tenancy by petitioners to speak of. They add
that the existing contract between them and petitioners is an ordinary lease, governed by the Civil
Code. Respondents further claim that petitioners failed to pay the agreed rental covering the
period January 1997 to December 1997. Accordingly, respondents were constrained to file an
ejectment case against petitioners before the Metropolitan Trial Court (MTC) of Malabon, Branch
55, conformably with the provision on venue in the lease contract. MTC issued a judgment based on
a compromise agreement wherein the parties agreed, that petitioners would vacate the leased
premises not later than December 1999. Petitioners filed a complaint for maintenance of peaceful
possession and issuance of mandatory preliminary injunction with the Provincial Agrarian Reform
Adjudication Board, Region III (PARAB). Respondents filed a motion to dismiss it, alleging lack of
jurisdiction, improper venue and litis pendentia, and/or res judicata. The PARAB denied the motion
to dismiss. Bautista filed a motion for intervention. He alleged that he had entered into a one year-
joint venture agreement dated November 1998, to expire on December 1999, with the petitioners
to augment their harvest and enhance their fishpond technology. Intervenor claims that he has the
right of possession over the subject fishpond as respondents. Petitioners amended their complaint
to include intervenor Kenneth Bautista as one of the defendants.PARAB rendered judgment in favor
of herein petitioners.
In the meantime, while the complaint before the PARAB was pending, herein petitioners 21
days before the expiration of the lease contract and the date to relinquish possession of the
fishpond pursuant to the compromise agreement, filed with the RTC of Malabon, a petition for
annulment of the MTC judgment, order, and compromise agreement. Petitioners raised issues
concerning the tenancy relationship, lack of assistance by counsel in arriving at the compromise
agreement, as well as lack of jurisdiction by the MTC. Respondents filed a motion to dismiss
premised on culpability of petitioners for forum shopping, including lack of cause of action to file
the petition. RTC dismissed the petition for lack of cause of action and failure to prosecute. As it
turned out, even before the RTC’s Order of dismissal came out in their favor, respondents had
already elevated the controversy to the appellate court. Respondents filed with the Court of
Appeals a petition for certiorari assailing decision of the PARAB. Court of Appeals set aside the
PARAB decision. Petitioners filed before this Court an appeal via a petition praying for reversal of
the above stated CA decision, which ruled that the PARAB had no jurisdiction to hear and decide
the complaint filed by petitioners, and thus ordered the immediate execution of MTC judgment.
ISSUE: Whether or not the PARAB had jurisdiction to hear and decide the complaint for
maintenance of peaceful possession and issuance of mandatory preliminary injunction.
HELD: These issues depend on whether the fishpond, which is the subject of the controversy, is
governed by the Comprehensive Agrarian Reform Law (CARL).The Court of Appeals in ruling that
the PARAB has no jurisdiction relies on our ruling in the case of Atlas Fertilizer Corp. v. Secretary,
Dept. of Agrarian Reform where we held that Rep. Act No. 7881 expressly provides that fishponds
and prawn farms are excluded from the coverage of CARL. In reversing the PARAB’s findings, the
appellate court stated that the provincial adjudicator’s jurisdiction is only to hear, determine and
adjudicate all agrarian cases, AND disputes and incidents in connection therewith (DARAB New
Rules of Procedure, Rule 2, Section 2), and considering further that lands devoted to fishing are not
Jasmine
Chavez, Chito
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LABOR LAW
agricultural lands because the use of the land is only incidental to and not the principal factor in
productivity, as implied by this Court in the Atlas case, it follows that the PARAB has no jurisdiction
over the instant case. The jurisdiction of the PARAB in this case is limited to agrarian disputes or
controversies and other matters or incidents involving the implementation of the Comprehensive
Agrarian Reform Program (CARP) under Rep. Act No. 6657, Rep. Act No. 3844 and other agrarian
laws. An agrarian dispute is defined as any controversy relating to tenurial arrangements, whether
leasehold, tenancy, stewardship or otherwise, over lands devoted to agriculture, including disputes
concerning farm workers associations or representation of persons in negotiating, fixing,
maintaining, changing or seeking to arrange terms or conditions of such tenurial arrangements.
Although Section 166 (1) of Rep. Act No. 3844 had included fishponds in its definition of agricultural
land within its coverage, this definition must be considered modified in the light of Sec. 2 of Rep.
Act No. 7881, which amended Section 10 of Rep. Act No. 6657, otherwise known as the
Comprehensive Agrarian Reform Law (CARL). Expressly, the amendment has excluded private lands
actually, directly and exclusively used for prawn farms and fishponds from the coverage of the
CARL. Clearly, by virtue of the amendments to the CARL, the operation of a fishpond is no longer
considered an agricultural activity, and a parcel of land devoted to fishpond operation is not
agricultural land as therein defined.
Consequently, we rule that there is no agrarian tenancy relationship to speak of in this case
at this time, since certain requirements set by present law on the matter have not been met.
Among these are: (1) the subject matter should be agricultural land; (2) the purpose should be
agricultural production; and (3) there should be personal cultivation done by the tenants
themselves. Here, we also find that petitioners failed to prove their personal “cultivation” of the
area in question. There is personal cultivation if the tenant (lessee) cultivates the land himself or
with the aid of the immediate farm household, which refers to the members of the family of the
tenant (lessee) and other persons who are dependent upon him for support and who usually help
him in the activities. Particularly fatal to petitioners’ cause is the joint venture agreement with
Bautista. This agreement provides, among others, that Bautista will share in the operation and
management of the fishpond; pay the agreed rentals to the registered owner of the land; and that
after deducting all operational expenses, Bautista and petitioners shall have equal share in the net
profits. Not only does it reflect lack of personal cultivation by petitioners, but it also shows the
nature of their fishpond operation is that of a large scale commercial venture.
COMPREHENSIVE AGRARIAN REFORM PROGRAM
SAMAHAN NG MAGSASAKA SA SAN JOSEP vs. MARIETTA VALISNO, ET AL.

[G.R. No. 158314. June 3, 2004.]
FACTS: The original 57-hectare property, situated in La Fuente, Sta. Rosa, Nueva Ecija, was
formerly registered in the name of Dr. Nicolas Valisno, Sr. Before Presidential Decree No. 27, the
land was the subject of a judicial ejectment suit, whereby in 1971, the Valisnos' tenants were
ejected from the property. Among these tenants was Dominador Maglalang, who represents the
SMSJ in the instant proceedings.
Dr. Valisno mortgaged 12 hectares of his property to Renato and Angelito Banting. The
property was subdivided into ten lots on individual titles were issued in the name of the eight
children of Nicolas, Angelito Banting, and Renato Banting. The mortgage on the 12 hectare portion
was foreclosed and the property sold at public auction, four grandchildren of Dr. Nicolas Valisno,
redeemed the same from the mortgagees. At the time of the redemption, Maria Cristina, Leonora
and Gregorio were all minors; only Benedicto was of legal age, being then 26 years old. The
redemption was made on October 25, 1973, but the titles to the land were not transferred to the
redemptioners until November 26, 1998.
Subsequently, the entire 57-hectare property became the subject of expropriation

proceedings before the Department of Agrarian Reform ("DAR"). Dominador Maglalang, in behalf of
CHAIRPERSONS
91
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the SMSJ, filed a petition for coverage of the subject landholding under the CARL, which petition
was dismissed for want of jurisdiction. On June 14, 1995, Rogelio Chaves, DAR Provincial Agrarian
Reform Officer ("PARO"), issued a Memorandum stating that the property had been subdivided
among the heirs of Dr. Nicolas Valisno Sr. before the issuance of PD 27 into tracts of approximately
six hectares each. Nevertheless, PARO Chaves added that the excess over the five-hectare
retention limit could still be covered under RA 6657.
On appeal, the Office of the Regional Director declared the Valisno property exempt from
the coverage of PD 27 and RA 6657. This was reversed by then Secretary Garilao, who held that the
property is covered by the Comprehensive Agrarian Reform Program, subject to the retention rights
of the heirs of Nicolas, Sr. The Valisno heirs filed a motion for reconsideration of the said order,
but the same was denied. They then filed a consolidated application for retention. The SMSJ,
through Dominador Maglalang, opposed the Consolidated Application for Retention, specifically
objecting to the award in favor of the Grandchildren-Awardees because they are not actually tilling
nor directly managing the land in question as required by law.
On appeal, the DAR Secretary affirmed the Order of the Regional Director. The motion for
reconsideration filed by the heirs of Dr. Valisno was denied. Respondent heirs filed a petition for
review with the Court of Appeals. The Court of Appeals reversed the Orders of the DAR Secretary,
granted the award of one hectare each for the seven Grandchildren-Awardees, and affirmed the
retention rights of the Redemptioner-Grandchildren over three hectares each, or a total of 12
hectares. Petitioners filed a partial motion for reconsideration, assailing the right of retention of
the four. This motion was denied.
ISSUE: Whether or not, the grandchildren of the late Dr. Nicolas Valisno Sr. are entitled to
retention rights as landowners under Republic Act No. 6657, or the Comprehensive Agrarian Reform
Law.
HELD: The appeal lacks merit. The Court of Appeals found the following facts relevant: First, that
the mortgages were constituted over a 12-hectare portion of Dr. Valisno's estate in 1972. Second,
that the titles to the property were transferred to the names of the mortgagees in 1972, covering a
6-hectare property in La Fuente, Sta. Rosa, Nueva Ecija, issued in the name of Angelito Banting;
likewise covering a 6-hectare property in La Fuente, Sta. Rosa, Nueva Ecija, issued in the name of
Renato Banting. Third, these properties were redeemed by the Redemptioner-Grandchildren on
October 25, 1973, at the time of which redemption three of the four Redemptioner-Grandchildren
were minors.
It is a well-settled rule that only questions of law may be reviewed by the Supreme Court in
an appeal by certiorari. In the case at bar, no reason exists for us to disregard the findings of fact
of the Court of Appeals. The factual findings are borne out by the record and are supported by
substantial evidence. Respondents contend that the redemption made by the petitioners was
simulated, calculated to avoid the effects of agrarian reform considering that at the time of
redemption the latter were still minors and could not have resources, in their own right, to pay the
price thereof.
We are not persuaded. While it is true that a transaction entered into by a party who is
incapable of consent is voidable, however such transaction is valid until annulled. The redemption
made by the four petitioners has never been annulled, thus, it is valid.
The transfer of the titles to the two 6-hectare properties in 1972 removed the parcels of land from
the entire Valisno estate. The evidence clearly demonstrates that Renato Banting and Angelito
Banting became the registered owners of the property in 1972. These two separate properties were
then transferred to the Redemptioner-Grandchildren in 1973. Regardless of the source of their
funds, and regardless of their minority, they became the legal owners of the property in 1973.
Moreover, although Maria Cristina, Leonora and Gregorio were all minors in 1973, they were
undoubtedly of legal age in 1994, when SMSJ initiated the petition for coverage of the subject
Jasmine
Chavez, Chito
92
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LABOR LAW
landholding under the CARL, and of course were likewise of legal age in 1997, when all the Valisno
heirs filed their Consolidated Application for Retention and Award under RA 6657.
As owners in their own right of the questioned properties, Redemptioner-Grandchildren

enjoyed the right of retention granted to all landowners. This right of retention is a constitutionally
guaranteed right, which is subject to qualification by the legislature. It serves to mitigate the
effects of compulsory land acquisition by balancing the rights of the landowner and the tenant and
by implementing the doctrine that social justice was not meant to perpetrate an injustice against
the landowner. A retained area, as its name denotes, is land which is not supposed to leave the
landowner's dominion, thus sparing the government from the inconvenience of taking land only to
return it to the landowner afterwards, which would be a pointless process.
PD 626
AZUCENA O. SALALIMA vs. EMPLOYEES COMPENSATION COMMISSION, ET AL.

[G.R. No. 146360 May 20, 2004]
FACTS: Petitioner's husband, Juancho S. Salalima, was employed for twenty-nine years as a route
helper and subsequently as route salesman for the Meycauayan Plant of Coca-Cola Bottlers Phils.,
Incorporated. In 1989, Juancho was diagnosed with minimal pulmonary tuberculosis. His biopsy
revealed that he had "Adenocarcinoma, poorly differentiated, metastatic". He underwent
chemotherapy.Later, he was found to be suffering from pneumonia. He was confined at the Makati
Medical Center and died two days due to "Adenocarcinoma of the Lungs with widespread
metastasis.”
A claim for compensation benefits under P.D. 626 was filed by his surviving wife, Azucena,
petitioner herein, with the SSS. The claim for benefit was denied on the ground that
Adenocarcinoma of the Lungs (Cancer of the Lungs) had no causal relationship with Juancho's job as
a route salesman. Petitioner brought the case to the ECC, which affirmed SSS. ECC stated that
Juancho's exposure to smog and dust is not associated with the development of lung cancer. In the
Court of Appeals affirmed ECC.
ISSUE: Whether or not, the denial of the claim of the death benefits under P.D. 626, deceased is
proper.
HELD: Yes. It is worth noting that tuberculosis is most commonly confused with carcinoma of the
lung because the highest incidence of both diseases is in the upper lobe of the lungs and in older
men. Tuberculosis is a disease characterized by lesions in the lungs as well as tuberculous scars.
Thus, in light of Juancho's continued exposure to detrimental work environment and constant
fatigue, the possibility that Juancho's Adenocarcinoma of the lungs developed from the worsening
of his pulmonary tuberculosis is not remote.
The degree of proof required under P.D. No. 626 is merely substantial evidence, What the
law requires is a reasonable work-connection and not a direct causal relation. It is enough that the
hypothesis on which the workmen's claim is based is probable. Medical opinion to the contrary can
be disregarded especially where there is some basis in the facts for inferring a work-connection.
Juancho's job required long hours on the streets as well as his carrying of cases of soft drinks during
sales calls. The combination of fatigue and the pollutants that abound in his work environment
verily contributed to the worsening of his already weak respiratory system. His continuous exposure
to these factors may have led to the development of his cancer of the lungs.
It escapes reason as well as one's sense of equity that Juancho's heirs should now be denied
compensation (death) benefits for the sole reason that his illness immediately before he died was
not compensable in his line of work. P.D. 626, as amended, is said to have abandoned the
presumption of compensability and the theory of aggravation prevalent under the Workmen's
Compensation Act. Despite such abandonment, however, the present law has not ceased to be an
CHAIRPERSONS
93
Digests
employees' compensation law or a social legislation; hence, the liberality of the law in favor of the
working man and woman still prevails, and the official agency charged by law to implement the
constitutional guarantee of social justice should adopt a liberal attitude in favor of the employee in
deciding claims for compensability, especially in light of the compassionate policy towards labor
which the 1987 Constitution vivifies and enhances.

Jasmine
Chavez, Chito

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1

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